Let’s kick start this one with everything that is wrong with the world in a single run-on sentence: North Korea is threatening nuclear war, unemployment ticked back up to 9.8%, the average 30-year fixed mortgage rate jumped up to 5%, the Federal Reserve described their own progress towards our economic goals as “disappointingly slow” (nooooo, really?), the European Central Bank is resorting to quantitative easing immediately after they criticized us for the same dang thing, and Bernie Madoff’s son hung himself with a dog leash.
Yeah. What the hell, world. I thought we were all supposed to be in the holiday spirit or something.
Alright, in fairness things aren’t necessarily all bad. Stocks have been kicking booty lately. Many financial analysts are upping their forecasts for 2011’s domestic growth. Consumer inflation came in at a tepid pace of +0.1% in November for both headline and core readings (dragged down by rental deterioration, but we’ll ignore that and just be happy for low inflation for right now). Heck, Obama and the GOP finally agreed on a tax relief bill that passed Senate’s vote today. I guess Boehner’s heart grew three sizes that day.
Quick side note, have any of you noticed that every political news headline says something about “Obama and the GOP,” not “the Democrats and the GOP?” It’s like all the Democrats just became a conglomerated wart on Obama’s mighty backside. Uncool of them to make Obama face the Republi-cans alone, because Republicans have guns.
On that line of thought, I am interested to see what sort of aftermath results from Judge Henry Hud-son’s decision that the provision in our recent health care overhaul that mandates all citizens must carry at least basic health insurance was unconstitutional. That has ‘political bloodbath’ written all over it.
Anywho, the dead horse I would like to kick today is the pervasive state of negative equity in this country. Let’s be honest with ourselves: a lot of people are upside-down on their mortgages right now (they owe more than the current marketable value of the property). Some of them will either walk away or strategically default, but most won’t. And just because they’re upside-down doesn’t mean they can’t necessarily afford their payments. But I’ll guarantee you it is dissuading them from making home improvements. Without equity in their homes, they can’t leverage any more debt to finance big ticket item purchases. And they certainly aren’t going to move into a bigger place.
Think about the math: to sell your house and move up you would need
1) Enough cash to pay off the existing mortgage...
2) ...plus an extra 6% for the realtor’s fee…
3) ...plus 3.5%-20% (depending on what kind of mortgage you get) down payment…
4) ...plus closing costs for the new home purchase.
So, if you want to think about how many people are upside-down (or not right-side up enough) to clear that pile o’ bills, the number jumps from 22.5% of American homeowners to just shy of 50%.
Yet we somehow wonder why things aren’t exactly clicking along in the lovely land of real estate.
I don’t mean to gloom and doom you. I stand by what I said in an earlier newsletter about real estate returning to it’s normal pattern of slow and steady growth off of the floor we are putting in. All I am trying to say is that there is somewhat of a vicious cycle working in real estate that will have an enormous ripple effect across all industries. Housing isn’t just about housing: housing is about wealth.
Wednesday, December 15, 2010
Monday, November 29, 2010
Quantitative Easing II: God bless them, at least they're trying
The big deal in the markets right now is the ripple effect resulting from Quantitative Easing II, or the Fed’s decision to purchase 600 billion or so in long-term treasury bonds. I’m gonna try and explain this in as concise a manner as I can, but it’s complicated as all heck, so bear with me.
The Fed pumps out 600 billion and buys treasuries. Two things are supposed to happen:
1) Dollar devalues because there’s more dollars out there (basic supply and demand)
2) Treasury rates go down (abruptly higher demand means that bond rates can be lower)
The idea here is that super low bond rates will force investors to go looking to other asset classes (like stocks) and will spurn growth in the economy and job market. So what happened?
1) Dollar immediately rallied
2) Rates went up
Suh-wing and a miss, guys.
Alright. From a hypothetical standpoint, it should have worked. Of course, hypothetically speaking, communism works too. However, the massive unraveling of the European debt crisis seems to be trumping any monetary action our country takes. The joys of a globalized economy.
And, we are faced with the moral dilemma of driving down rates that are already at historic lows. The only tangible change will be offering credit to what most would consider to be non-creditworthy borrowers, which is how this whole mess started in the first place.
But, this whole FUBAR situation is a reminder that these rates won’t be here forever. Hint hint, pro-spective client.
Sarah Palin has recently come forward saying that she could beat Obama in 2012 if she ran for president. A message to Sarah: if you would like MY vote, the only way you’re getting it is if you find Osama Bin Laden, catch him, and field dress him right then and there using only a Buck knife, the American spirit and your teeth while your reality show film crew immortalizes it all. That would be cool. I can vote for that.
General Motors had a well-received IPO recently. This stands as a strong symbol for how far the American economy has come since the lows we experienced in 2008. It ain’t perfect yet, but it cer-tainly is improving.
Airport security personnel get to now enjoy a cheap thrill at the workplace as pat-downs have become mandatory before boarding a plane. This has raised an interesting conundrum with US residents: would you rather be felt up by a stranger or blown up mid-air?
I say “grab away, security guards.” Usually you have to pay extra for that kind of action.
And global tension has erupted from North Korea’s decision to shell a South Korean island for 90 minutes, resulting in multiple injuries and 4 casualties. Since then, they have mobilized a pile of surface-to-surface missiles and some surface-to-airs. Mayhaps someone who remembers how WWII ended should remind Kim Jong Il what happens when you try to screw with allies of the US.
That being said, North Korea is BFF with China, which complicates things slightly.
Since mid-term elections, budget cuts have been the talk of Washington. From ‘adult conversations’ that are long overdue concerning Medicare and Social Security to a recent two-year pay freeze for ci-vilian government workers, all our politicians are hell-bent on tightening the belt. Frankly, I had to let my belt out by a notch after my gluttonous Thanksgiving gorge-myself-fest. Iiiiiiiironic.
The Fed pumps out 600 billion and buys treasuries. Two things are supposed to happen:
1) Dollar devalues because there’s more dollars out there (basic supply and demand)
2) Treasury rates go down (abruptly higher demand means that bond rates can be lower)
The idea here is that super low bond rates will force investors to go looking to other asset classes (like stocks) and will spurn growth in the economy and job market. So what happened?
1) Dollar immediately rallied
2) Rates went up
Suh-wing and a miss, guys.
Alright. From a hypothetical standpoint, it should have worked. Of course, hypothetically speaking, communism works too. However, the massive unraveling of the European debt crisis seems to be trumping any monetary action our country takes. The joys of a globalized economy.
And, we are faced with the moral dilemma of driving down rates that are already at historic lows. The only tangible change will be offering credit to what most would consider to be non-creditworthy borrowers, which is how this whole mess started in the first place.
But, this whole FUBAR situation is a reminder that these rates won’t be here forever. Hint hint, pro-spective client.
Sarah Palin has recently come forward saying that she could beat Obama in 2012 if she ran for president. A message to Sarah: if you would like MY vote, the only way you’re getting it is if you find Osama Bin Laden, catch him, and field dress him right then and there using only a Buck knife, the American spirit and your teeth while your reality show film crew immortalizes it all. That would be cool. I can vote for that.
General Motors had a well-received IPO recently. This stands as a strong symbol for how far the American economy has come since the lows we experienced in 2008. It ain’t perfect yet, but it cer-tainly is improving.
Airport security personnel get to now enjoy a cheap thrill at the workplace as pat-downs have become mandatory before boarding a plane. This has raised an interesting conundrum with US residents: would you rather be felt up by a stranger or blown up mid-air?
I say “grab away, security guards.” Usually you have to pay extra for that kind of action.
And global tension has erupted from North Korea’s decision to shell a South Korean island for 90 minutes, resulting in multiple injuries and 4 casualties. Since then, they have mobilized a pile of surface-to-surface missiles and some surface-to-airs. Mayhaps someone who remembers how WWII ended should remind Kim Jong Il what happens when you try to screw with allies of the US.
That being said, North Korea is BFF with China, which complicates things slightly.
Since mid-term elections, budget cuts have been the talk of Washington. From ‘adult conversations’ that are long overdue concerning Medicare and Social Security to a recent two-year pay freeze for ci-vilian government workers, all our politicians are hell-bent on tightening the belt. Frankly, I had to let my belt out by a notch after my gluttonous Thanksgiving gorge-myself-fest. Iiiiiiiironic.
Friday, November 5, 2010
We're changing the change because the change we changed in the first place wasn't change-y enough
Roll crimson tide! Get it? Because the color of the Republican party is red and they took home a solid electoral victory this week? Yeah, that’s smart humor right there. And the only bone I’m throwing at you ‘Bama fans EVER.
Alright, housekeeping note first: I just did a massive update of my distribution list, meaning that this is the first newsletter of mine a lot of you are seeing. Hello, new people. Good to have you in my bi-monthly blasts. I hope you enjoy them. If you don’t, you can unsubscribe. And see how dull and pointless life is without my awesome opinions and humor, jerk.
Okie dokie, now that all of that is settled, I got a ton of ground to cover. To address the elephant in the room: big ol’ victory for the GOP Tuesday as they took back the House of Representatives. Lots of happy people, lots of sad people, such is the nature of politics. I’m just glad to be done with the inun-dation of roadside signage and attack ads on TV. Now old people can go back to being angry about their nurses stealing their medication instead of the government stealing their retirements.
One consequence of this shift in the balance of power is that Nancy Pelosi shall be replaced as speaker of the house by John Boehner. I’m sorry, but every time I hear representative Boehner’s name I can only think about Kirk Cameron’s idiot sidekick Boner from Growing Pains. And that makes me giggle because I’m immature.
Wednesday, our Federal Reserve ended their two day FOMC meeting and announced QE2, which sounds a lot more like a move in a chess game than a stimulus plan. It stands for quantitative easing 2 and means that they are going to crank out 600 billion more in long-term treasury purchases at a pace of approximately $75,000,000,000 per month.
So how is this series of big numbers supposed to affect you? Well, the idea is that the Fed buys treas-uries from banks, giving them money to lend. It also increases bond demand, which drives interest rates down. Banks lend more money (more mortgages get written helping the housing market, small business loans become more accessible which spurs hiring in the private sector) and investors are dissuaded from investing in safe-haven bonds and turn their money to equipment purchases (expanding their businesses) or stocks (expanding business balance sheets and capitalizing growth, hopefully translating to more jobs).
The potential downside? Dollar devaluation. A weak currency weakens our overall stature in the in-ternational economic community. It also opens the doorway to high-level inflation, as commodities get more expensive and our currency weakens. Policy-makers believe that the benefits of quicker growth right now outweigh the costs of dollar weakness and inflation later on. There are strong opinions on either side of this issue. Only time shall tell if the course they are taking is the right one.
Existing home sales leapt upwards by 10.0% in September. I could rant and rave about how awesome this is and what a portent it is of things to come and how we all ought to cash out our kids’ college funds and buy properties, but I know how little credibility to give a single month’s worth of gains. It’s a good thing, don’t get me wrong. But we’ll see if the housing market can maintain this kind of trajectory over the tail end of 2010.
And a big ‘WOO HOO!’ for UPS and Fed-ex for successfully identifying and intercepting what could have been explosive devices sent by terrorists from Yemen. Seriously, think about how many boxes those people crank through on a daily basis and they found the two that held threats. That’s logistics. Suck failure, terrorists.
I rarely redirect y’all to another writer’s work, but Diana Olick of CNBC had a striking article recently concerning the housing market with a particular focus on the South Florida condo market. If you’ve got time to kill, it’s a good read. Click here to link over to it. Happy November, everybody.
Alright, housekeeping note first: I just did a massive update of my distribution list, meaning that this is the first newsletter of mine a lot of you are seeing. Hello, new people. Good to have you in my bi-monthly blasts. I hope you enjoy them. If you don’t, you can unsubscribe. And see how dull and pointless life is without my awesome opinions and humor, jerk.
Okie dokie, now that all of that is settled, I got a ton of ground to cover. To address the elephant in the room: big ol’ victory for the GOP Tuesday as they took back the House of Representatives. Lots of happy people, lots of sad people, such is the nature of politics. I’m just glad to be done with the inun-dation of roadside signage and attack ads on TV. Now old people can go back to being angry about their nurses stealing their medication instead of the government stealing their retirements.
One consequence of this shift in the balance of power is that Nancy Pelosi shall be replaced as speaker of the house by John Boehner. I’m sorry, but every time I hear representative Boehner’s name I can only think about Kirk Cameron’s idiot sidekick Boner from Growing Pains. And that makes me giggle because I’m immature.
Wednesday, our Federal Reserve ended their two day FOMC meeting and announced QE2, which sounds a lot more like a move in a chess game than a stimulus plan. It stands for quantitative easing 2 and means that they are going to crank out 600 billion more in long-term treasury purchases at a pace of approximately $75,000,000,000 per month.
So how is this series of big numbers supposed to affect you? Well, the idea is that the Fed buys treas-uries from banks, giving them money to lend. It also increases bond demand, which drives interest rates down. Banks lend more money (more mortgages get written helping the housing market, small business loans become more accessible which spurs hiring in the private sector) and investors are dissuaded from investing in safe-haven bonds and turn their money to equipment purchases (expanding their businesses) or stocks (expanding business balance sheets and capitalizing growth, hopefully translating to more jobs).
The potential downside? Dollar devaluation. A weak currency weakens our overall stature in the in-ternational economic community. It also opens the doorway to high-level inflation, as commodities get more expensive and our currency weakens. Policy-makers believe that the benefits of quicker growth right now outweigh the costs of dollar weakness and inflation later on. There are strong opinions on either side of this issue. Only time shall tell if the course they are taking is the right one.
Existing home sales leapt upwards by 10.0% in September. I could rant and rave about how awesome this is and what a portent it is of things to come and how we all ought to cash out our kids’ college funds and buy properties, but I know how little credibility to give a single month’s worth of gains. It’s a good thing, don’t get me wrong. But we’ll see if the housing market can maintain this kind of trajectory over the tail end of 2010.
And a big ‘WOO HOO!’ for UPS and Fed-ex for successfully identifying and intercepting what could have been explosive devices sent by terrorists from Yemen. Seriously, think about how many boxes those people crank through on a daily basis and they found the two that held threats. That’s logistics. Suck failure, terrorists.
I rarely redirect y’all to another writer’s work, but Diana Olick of CNBC had a striking article recently concerning the housing market with a particular focus on the South Florida condo market. If you’ve got time to kill, it’s a good read. Click here to link over to it. Happy November, everybody.
Tuesday, October 19, 2010
I do believe it's time for a hot positivity injection
Every so often, I try to make a point through these newsletters. This is one of those instances. Bear with me.
I’m feeling overtly positive right now. Very ‘glass is half full’. Not necessarily any kind of justified positivity incited by stupendous macro-economic data, just viewing the world through rose-tinted glasses.
Let’s talk hard numbers:
1) The consumer price index came in flat at +0.1% month over month.
2) Unemployment is hanging out in the high 9% range.
3) Our economy is growing at slower than a 2% annualized rate.
4) New problems concerning improperly filed foreclosures and overly skittish lending
practices are plaguing our housing system with more problems than it is prepared to handle
in its current iteration.
None of this bodes well for a prompt and robust rebound in home prices. Flat job growth, flat economic growth and flat price movement means, for the time being, everything is kinda chillin’ where it’s at.
So here’s the reason I have a big, dopey grin on my face: I am an integral part in a certain sector of this fine nation’s economy, the housing market. And as badly as housing has been hammered, there really are no domestic stand-out sectors for investors to throw their money at. Sure, you can point out various emerging markets or commodities that have enjoyed a good rally as of late. Heck, I’m sure there are even stocks out there that have been kicking butt and taking names. But you can’t point out an overall market that has safe, non-volatile growth right now.
And just because we’re in recovery from a nasty recession doesn’t mean people aren’t still seeking a solid and stable return-on-investment.
So, I’m not gonna lie to you and say that housing is primed for a bounce. It’s not. But what can you point towards that IS ready for a bounce? Equities, as measured by the Dow Jones Industrial Average has enjoyed a near 75% rebound from it’s 2008 lows already. Housing has not seen any sort of com-parable gains. Bonds are yielding investors…. the safety of knowing they’ll get their money back eventually.
So, what do you see happening first: Stocks moving from where they’re at back up to the sugar-high 14000+ level or that $80,000 place appreciating back up to a reasonable $100,000 price?
Right this second, we are in a world of confusion. Problems of unprecedented size have been thrust upon our best and brightest and they are doing their best to navigate us all through it. However, it is a painful process of trial and error that will be further complicated by the winds of political change sweeping through Washington. All we are doing right now is establishing a rock-bottom floor for real estate prices to launch off of and extend away from for the next few decades. It’ll have blips of ups and downs, but the trendline will likely stay positive for a long while as we get our feet back underneath ourselves and move forward out of this dry spell.
This gigantic slowdown is offering all of us at the ground floor an opportunity to get our financial lives straight and capitalize on the current depressed market. I’m not trying to sell you that housing is a sure-fire bet, but I am at the very least trying to remove the entire sector from ‘economic pariah’ status. People gotta live somewhere. Population is growing. Florida is a nice place to live. You do the math.
I’m feeling overtly positive right now. Very ‘glass is half full’. Not necessarily any kind of justified positivity incited by stupendous macro-economic data, just viewing the world through rose-tinted glasses.
Let’s talk hard numbers:
1) The consumer price index came in flat at +0.1% month over month.
2) Unemployment is hanging out in the high 9% range.
3) Our economy is growing at slower than a 2% annualized rate.
4) New problems concerning improperly filed foreclosures and overly skittish lending
practices are plaguing our housing system with more problems than it is prepared to handle
in its current iteration.
None of this bodes well for a prompt and robust rebound in home prices. Flat job growth, flat economic growth and flat price movement means, for the time being, everything is kinda chillin’ where it’s at.
So here’s the reason I have a big, dopey grin on my face: I am an integral part in a certain sector of this fine nation’s economy, the housing market. And as badly as housing has been hammered, there really are no domestic stand-out sectors for investors to throw their money at. Sure, you can point out various emerging markets or commodities that have enjoyed a good rally as of late. Heck, I’m sure there are even stocks out there that have been kicking butt and taking names. But you can’t point out an overall market that has safe, non-volatile growth right now.
And just because we’re in recovery from a nasty recession doesn’t mean people aren’t still seeking a solid and stable return-on-investment.
So, I’m not gonna lie to you and say that housing is primed for a bounce. It’s not. But what can you point towards that IS ready for a bounce? Equities, as measured by the Dow Jones Industrial Average has enjoyed a near 75% rebound from it’s 2008 lows already. Housing has not seen any sort of com-parable gains. Bonds are yielding investors…. the safety of knowing they’ll get their money back eventually.
So, what do you see happening first: Stocks moving from where they’re at back up to the sugar-high 14000+ level or that $80,000 place appreciating back up to a reasonable $100,000 price?
Right this second, we are in a world of confusion. Problems of unprecedented size have been thrust upon our best and brightest and they are doing their best to navigate us all through it. However, it is a painful process of trial and error that will be further complicated by the winds of political change sweeping through Washington. All we are doing right now is establishing a rock-bottom floor for real estate prices to launch off of and extend away from for the next few decades. It’ll have blips of ups and downs, but the trendline will likely stay positive for a long while as we get our feet back underneath ourselves and move forward out of this dry spell.
This gigantic slowdown is offering all of us at the ground floor an opportunity to get our financial lives straight and capitalize on the current depressed market. I’m not trying to sell you that housing is a sure-fire bet, but I am at the very least trying to remove the entire sector from ‘economic pariah’ status. People gotta live somewhere. Population is growing. Florida is a nice place to live. You do the math.
Tuesday, October 12, 2010
A tale of how we paid top dollar through bailouts to screw ourselves yet again
Remember when we had a liquidity crisis? When all the banks started freaking out about the mounting losses from crappy loans they slapped together without reading the paperwork? And then once the taxpayers bailed them out we suddenly had a foreclosure crisis because now they could afford to pay the people to take away our homes? Remember that?
Well ladies and gentlemen, let me be the first to introduce you to our latest addition to the American family of crises, the botched paperwork crisis! (cue thunderous applause followed by an awkward and confused silence)
Yes, it appears that a ton of deals to sell foreclosed properties have been halted indefinitely because the documentation to foreclose in the 1st place was rushed through the system and, as such, is full of holes. So, just to clarify, the mass of issues started by shoddy, unread paperwork used to write bad loans is now being handled by bankers who are writing shoddy, unread paperwork to foreclose.
I’d like to say it’s the blind leading the blind, but I don’t think that’s a brutal enough metaphor. How’s about: it’s like the criminally insane leading the morally destitute. That seems to fit pretty well.
So how do lenders respond? By speeding up any foreclosures they know that they actually can get done. At the request of wards of the taxpayers Fannie Mae and Freddie Mac, any further delays in foreclosures have been cut short on properties seeking a short sale. So, if you were a homeowner who fell behind and was working with a real estate agent to try and sell the place and save both yourself and the economy at large the hindrance of foreclosure… well, sucks for you buddy. Not happening.
And while we’re on a happy note, our nation’s unemployment rate stayed steady at 9.6% as the econ-omy unexpectedly shed 95,000 jobs in September. Floridians, being the overachievers that we are, currently enjoy an 11.7% unemployment rate. The Federal Reserve Board has come out with multiple speeches implying pretty blatantly that another round of quantitative easing (printing money) is just around the corner.
I swear, by the end of this we’re gonna end up buried to our necks in cash with no living trees left over.
Mid-term elections continue to heat up. Most would agree that the Republicans are going to take the House of Representatives in a public backlash against the current establishment due to our economy’s continued weakness. But just as I was starting to understand the ‘red pill, blue pill’ dichotomy of our political structure, the Republicans have undergone mitosis and spawned a new entity: the Tea Party.
That is the first time I have used the term ‘mitosis’ in context since biology class, and I believe I deserve bonus points for it. I suggest the Democrats start the Coffee Party as their next tit for tat move. Because who drinks tea anymore? Or maybe the Red Bull Party. I could vote for that.
Finally, I’d like to share with you a lesson in hypocrisy. The Mortgage Bankers Association, one of the top proponents of fiscal responsibility in our nation chose to strategically default and walk away from their promissory obligations when their new headquarters building went upside-down on it’s mortgage. So, it’s not okay if YOU flush your faltering assets and bad debt, but it’s okay if they do it. Because, you know, they were the ones who got you there in the first place.
If I weren’t laughing, I’d be crying right now.
Well ladies and gentlemen, let me be the first to introduce you to our latest addition to the American family of crises, the botched paperwork crisis! (cue thunderous applause followed by an awkward and confused silence)
Yes, it appears that a ton of deals to sell foreclosed properties have been halted indefinitely because the documentation to foreclose in the 1st place was rushed through the system and, as such, is full of holes. So, just to clarify, the mass of issues started by shoddy, unread paperwork used to write bad loans is now being handled by bankers who are writing shoddy, unread paperwork to foreclose.
I’d like to say it’s the blind leading the blind, but I don’t think that’s a brutal enough metaphor. How’s about: it’s like the criminally insane leading the morally destitute. That seems to fit pretty well.
So how do lenders respond? By speeding up any foreclosures they know that they actually can get done. At the request of wards of the taxpayers Fannie Mae and Freddie Mac, any further delays in foreclosures have been cut short on properties seeking a short sale. So, if you were a homeowner who fell behind and was working with a real estate agent to try and sell the place and save both yourself and the economy at large the hindrance of foreclosure… well, sucks for you buddy. Not happening.
And while we’re on a happy note, our nation’s unemployment rate stayed steady at 9.6% as the econ-omy unexpectedly shed 95,000 jobs in September. Floridians, being the overachievers that we are, currently enjoy an 11.7% unemployment rate. The Federal Reserve Board has come out with multiple speeches implying pretty blatantly that another round of quantitative easing (printing money) is just around the corner.
I swear, by the end of this we’re gonna end up buried to our necks in cash with no living trees left over.
Mid-term elections continue to heat up. Most would agree that the Republicans are going to take the House of Representatives in a public backlash against the current establishment due to our economy’s continued weakness. But just as I was starting to understand the ‘red pill, blue pill’ dichotomy of our political structure, the Republicans have undergone mitosis and spawned a new entity: the Tea Party.
That is the first time I have used the term ‘mitosis’ in context since biology class, and I believe I deserve bonus points for it. I suggest the Democrats start the Coffee Party as their next tit for tat move. Because who drinks tea anymore? Or maybe the Red Bull Party. I could vote for that.
Finally, I’d like to share with you a lesson in hypocrisy. The Mortgage Bankers Association, one of the top proponents of fiscal responsibility in our nation chose to strategically default and walk away from their promissory obligations when their new headquarters building went upside-down on it’s mortgage. So, it’s not okay if YOU flush your faltering assets and bad debt, but it’s okay if they do it. Because, you know, they were the ones who got you there in the first place.
If I weren’t laughing, I’d be crying right now.
Tuesday, September 21, 2010
If you've been in a cave for the last month, this is pretty much all you need to know
Where have I been this past month? Why have I denied you your bi-weekly ration of off-color humor interwoven with current events? What possible excuse can I have for such a blatant shirking of my responsibilities?
Vacation. And it was AWESOME. I’m totally tanner than you right now.
So, I clearly have some ‘catch-up’ to do. And by golly, there was so much fun stuff going on in the world that I couldn’t bring myself to cut out any of it. They all won’t be as long as this one, I promise.
Almost 1 in 10 mortgages in this country is in default. 800 banks are now on the FDIC’s watch list and some economists believe upward of half of them could fail. Ben Bernanke came out and an¬nounced that more quantitative easing (printing serious cashola) was being considered. July’s existing home sales fell into the latrine. Clearly you people didn’t fix everything while I was sunning on the beach.
Okay, things aren’t super-dee-duper quite yet. However, I bring this up to reiterate that you need to filter the gloomy bold-faced headlines through a brain cell. News networks and newspapers (from which I imagine a large proportion of you derive your worldly information) love negativity. Because it sells.
Let’s take the deplorable existing home sales numbers for example. Month over month they dropped by 27.2%. Ouch. Now, those out there who are looking for ratings might say “These numbers clearly demonstrate a massive continued weakness in housing” and then they would interview a billion so-called experts/random people from the street/everything in-between who would justify their ‘logic’.
Housing ain’t recovered yet. No one is arguing that. But many will gloss over the fact that June was the final month that you could close in and still reap that $8000 homebuyer tax credit. So, it kinda makes perfect sense that a bunch of people flooded in while that offer was still on and then things cooled off the following month. I’m not trying to say things are great, but I am saying that they might be less bad than everyone wants you to believe.
And since I’m overtly hammering mainstream media right now, it’s as good a time as any to mention Glenn Beck’s Restoring Honor rally at the Lincoln Memorial. On the same day as MLK’s “I Have a Dream” speech. But it’s cool because it was a few steps down. Because that… makes it cool. I’m shocked that Honest Abe didn’t stand up and walk away during it.
And a hardcore republican told me that joke, so no getting mad at me.
Strikes ravaged London and Paris recently, crippling mass transit as residents got enraged over cost-cutting procedures from their respective governments. Evidently tightening the old belt after your con-tinent falls dangerously close to bankruptcy is a painful and unpleasant process. Food for thought, us…
The world of politics is heating up once again (as if it ever really cooled off in the 1st place). Mid-term elections are soon to be upon us. The main financial battle that seems to be surfacing surrounds the expiration of the Bush Tax Cuts. Democrats want them to be extended only for the bottom 98% of wage-earners and Republicans want to gridlock the whole thing until the last 2% are included. Obama is really flexing his public speaking muscles about every other time I turn the TV on.
Reverend Terry Jones and his face-consuming mustache enjoyed their 15 minutes of fame as he tried to re-popularize book burning (because clearly that’s the best way to solve religious differences). But the fun had to end when the United States Army sent suited representatives to the good reverend’s house and politely reminded him that his publicity stunt may be putting our soldiers directly in harm’s way. I imagine it is somewhat of a buzz-kill when you are informed that your own military is happy to erase your existence from the planet if you don’t start apologizing publically.
Rates are still super-low. I know you already knew that, but as a mortgage broker I’m kinda obligated to remind you. Constantly. Do that thing where you call me to refinance your mortgage. Now.
Lindsey Lohan continues to make me feel better about me. In the short time since my last newsletter, she managed to serve 1/3 of her sentence (which is a lot considering how loaded she is), get back into the public spotlight and then violate her probation AGAIN. Awesome, Lindsey. Fine work.
Oh, and Sarah Palin managed to clone herself. I liked it better when we stuck to cloning goats.
Vacation. And it was AWESOME. I’m totally tanner than you right now.
So, I clearly have some ‘catch-up’ to do. And by golly, there was so much fun stuff going on in the world that I couldn’t bring myself to cut out any of it. They all won’t be as long as this one, I promise.
Almost 1 in 10 mortgages in this country is in default. 800 banks are now on the FDIC’s watch list and some economists believe upward of half of them could fail. Ben Bernanke came out and an¬nounced that more quantitative easing (printing serious cashola) was being considered. July’s existing home sales fell into the latrine. Clearly you people didn’t fix everything while I was sunning on the beach.
Okay, things aren’t super-dee-duper quite yet. However, I bring this up to reiterate that you need to filter the gloomy bold-faced headlines through a brain cell. News networks and newspapers (from which I imagine a large proportion of you derive your worldly information) love negativity. Because it sells.
Let’s take the deplorable existing home sales numbers for example. Month over month they dropped by 27.2%. Ouch. Now, those out there who are looking for ratings might say “These numbers clearly demonstrate a massive continued weakness in housing” and then they would interview a billion so-called experts/random people from the street/everything in-between who would justify their ‘logic’.
Housing ain’t recovered yet. No one is arguing that. But many will gloss over the fact that June was the final month that you could close in and still reap that $8000 homebuyer tax credit. So, it kinda makes perfect sense that a bunch of people flooded in while that offer was still on and then things cooled off the following month. I’m not trying to say things are great, but I am saying that they might be less bad than everyone wants you to believe.
And since I’m overtly hammering mainstream media right now, it’s as good a time as any to mention Glenn Beck’s Restoring Honor rally at the Lincoln Memorial. On the same day as MLK’s “I Have a Dream” speech. But it’s cool because it was a few steps down. Because that… makes it cool. I’m shocked that Honest Abe didn’t stand up and walk away during it.
And a hardcore republican told me that joke, so no getting mad at me.
Strikes ravaged London and Paris recently, crippling mass transit as residents got enraged over cost-cutting procedures from their respective governments. Evidently tightening the old belt after your con-tinent falls dangerously close to bankruptcy is a painful and unpleasant process. Food for thought, us…
The world of politics is heating up once again (as if it ever really cooled off in the 1st place). Mid-term elections are soon to be upon us. The main financial battle that seems to be surfacing surrounds the expiration of the Bush Tax Cuts. Democrats want them to be extended only for the bottom 98% of wage-earners and Republicans want to gridlock the whole thing until the last 2% are included. Obama is really flexing his public speaking muscles about every other time I turn the TV on.
Reverend Terry Jones and his face-consuming mustache enjoyed their 15 minutes of fame as he tried to re-popularize book burning (because clearly that’s the best way to solve religious differences). But the fun had to end when the United States Army sent suited representatives to the good reverend’s house and politely reminded him that his publicity stunt may be putting our soldiers directly in harm’s way. I imagine it is somewhat of a buzz-kill when you are informed that your own military is happy to erase your existence from the planet if you don’t start apologizing publically.
Rates are still super-low. I know you already knew that, but as a mortgage broker I’m kinda obligated to remind you. Constantly. Do that thing where you call me to refinance your mortgage. Now.
Lindsey Lohan continues to make me feel better about me. In the short time since my last newsletter, she managed to serve 1/3 of her sentence (which is a lot considering how loaded she is), get back into the public spotlight and then violate her probation AGAIN. Awesome, Lindsey. Fine work.
Oh, and Sarah Palin managed to clone herself. I liked it better when we stuck to cloning goats.
Tuesday, August 17, 2010
Half of you are probably going to be angry with me after reading this, and I'm okay with that
In the words of Bud Light’s new terrible advertising campaign: Here we go.
The big buzz lately has been surrounding the proposed construction of a mosque just a couple blocks away from 9/11’s Ground Zero. People are raging about it. Symbolically, it is a slap in the face to all of the many victims of the horrific terrorist attack we Americans suffered.
But we don’t live in a nation of symbolism, we live in a nation of laws. And freedom of religion is a central law upon which our republic is predicated.
I think it sucks. I think it’s a massively ill-conceived idea. I think if this construction actually goes through some drunk redneck is going to Molotov cocktail the place. I think it will be the site of end¬less protests. I think talking heads and politicians will ride this controversy as far as they can. But I also think that, barring any legal problems of constructing the mosque, that I have absolutely no right to tell someone of a different ideology where they can or can’t practice their beliefs in this country. It’s just not what we do.
My contact info is at the bottom of this message if you’d like to scream at me. I welcome feedback.
Our economy continues to bump along as our elected officials navigate these completely uncharted waters. Remaining at the epicenter of the action is the home finance secondary market, the lynchpin for a sustainable housing recovery. Treasury Secretary Timothy Geithner is having talks with all the powers that be about the state of mortgage finance and has promised to have a “comprehensive” plan ready by January.
I imagine he’ll also have cancer cured by March, leaving him plenty of time to end world hunger by late May. World peace and the ability to time travel shouldn’t be more than a few months behind that.
China just passed Japan as the world’s second largest economy. No one was surprised.
Reports allege that the North Korean government tortured their soccer players (no, I will not call it futbol) and sentenced their head coach to hard labor after their early exit from the World Cup. And I thought people who played fantasy football took sports too seriously…
U.S. Treasury bond yields are ridiculously low. I know a lot of you aren’t thrillingly concerned about that, but it stands as one of the most glaring examples of how freaked out the investing community still is. I don’t mean to bring this up as a catalyst for pessimism, but it does give reason for pause.
The big buzz lately has been surrounding the proposed construction of a mosque just a couple blocks away from 9/11’s Ground Zero. People are raging about it. Symbolically, it is a slap in the face to all of the many victims of the horrific terrorist attack we Americans suffered.
But we don’t live in a nation of symbolism, we live in a nation of laws. And freedom of religion is a central law upon which our republic is predicated.
I think it sucks. I think it’s a massively ill-conceived idea. I think if this construction actually goes through some drunk redneck is going to Molotov cocktail the place. I think it will be the site of end¬less protests. I think talking heads and politicians will ride this controversy as far as they can. But I also think that, barring any legal problems of constructing the mosque, that I have absolutely no right to tell someone of a different ideology where they can or can’t practice their beliefs in this country. It’s just not what we do.
My contact info is at the bottom of this message if you’d like to scream at me. I welcome feedback.
Our economy continues to bump along as our elected officials navigate these completely uncharted waters. Remaining at the epicenter of the action is the home finance secondary market, the lynchpin for a sustainable housing recovery. Treasury Secretary Timothy Geithner is having talks with all the powers that be about the state of mortgage finance and has promised to have a “comprehensive” plan ready by January.
I imagine he’ll also have cancer cured by March, leaving him plenty of time to end world hunger by late May. World peace and the ability to time travel shouldn’t be more than a few months behind that.
China just passed Japan as the world’s second largest economy. No one was surprised.
Reports allege that the North Korean government tortured their soccer players (no, I will not call it futbol) and sentenced their head coach to hard labor after their early exit from the World Cup. And I thought people who played fantasy football took sports too seriously…
U.S. Treasury bond yields are ridiculously low. I know a lot of you aren’t thrillingly concerned about that, but it stands as one of the most glaring examples of how freaked out the investing community still is. I don’t mean to bring this up as a catalyst for pessimism, but it does give reason for pause.
Thursday, August 5, 2010
It's a great day to be gay! Hooray!
Well, California has gone and kicked up a big cloud of political crap again. U.S. District Court Judge Vaughn Walker recently overturned Cali’s ban on gay marriage declaring it unconstitutional. Of course, those in support of the ban have already rallied their lawyers and put sharpies to large pieces of posterboard, vowing to go to the appeals court and, well, appeal.
I gotta say, I liked it better when California was just on fire. Now they’ll really be flaming. BOO-YAH. Not that this has anything to do with the economy (except the fact that members of the GLBT community tend to have a higher net worth and higher income than their straight counterparts), I just thought it’d be fun to address. Get all of your angry feedback from both sides of the fence.
Another fun political war being waged is over extension of the Bush tax cuts that are geared towards the higher wage-earners in the country and are set to expire at the end of this year. It’s taken from a page of the trickle-down economics theory that if we reward the top tier of income earners (which tends to encompass the business owners out there) then everyone will benefit and jobs will be created. Results of this theory are somewhat mixed. My guess: more political gridlock and the expiration will just kinda happen all by itself.
So I guess you people are just gonna have to encrust the rims on your Rolls Royce with Cubic Zirco¬nias instead of diamonds. Tough, I know. Not quite as blingin’.
BP has finally excommunicated their old CEO Tony Hayward (why couldn’t we just guillotine him like the good old days?) and has opted to replace him with (drumroll please)… an AMERICAN. Hell yeah. Proving once again that if you can’t beat them, infiltrate their executive seats and rule them with an iron fist. It’s our way of getting back at them for the imperialistic rule of our 13 original colonies.
Well, this and the Revolutionary War. But mainly this.
The major stock indexes enjoyed July 2010 as their best month in over a year. Aaaaaaand none of the hedge funds made as much money as the general market, meaning those of you that paid fees to someone to watch your cash for you would have been better investing it equally across the market all by yourself. I mean, the dartboard approach would have at least been on par. Seriously, these guys are well-compensated idiots. Blows my mind.
I gotta say, I liked it better when California was just on fire. Now they’ll really be flaming. BOO-YAH. Not that this has anything to do with the economy (except the fact that members of the GLBT community tend to have a higher net worth and higher income than their straight counterparts), I just thought it’d be fun to address. Get all of your angry feedback from both sides of the fence.
Another fun political war being waged is over extension of the Bush tax cuts that are geared towards the higher wage-earners in the country and are set to expire at the end of this year. It’s taken from a page of the trickle-down economics theory that if we reward the top tier of income earners (which tends to encompass the business owners out there) then everyone will benefit and jobs will be created. Results of this theory are somewhat mixed. My guess: more political gridlock and the expiration will just kinda happen all by itself.
So I guess you people are just gonna have to encrust the rims on your Rolls Royce with Cubic Zirco¬nias instead of diamonds. Tough, I know. Not quite as blingin’.
BP has finally excommunicated their old CEO Tony Hayward (why couldn’t we just guillotine him like the good old days?) and has opted to replace him with (drumroll please)… an AMERICAN. Hell yeah. Proving once again that if you can’t beat them, infiltrate their executive seats and rule them with an iron fist. It’s our way of getting back at them for the imperialistic rule of our 13 original colonies.
Well, this and the Revolutionary War. But mainly this.
The major stock indexes enjoyed July 2010 as their best month in over a year. Aaaaaaand none of the hedge funds made as much money as the general market, meaning those of you that paid fees to someone to watch your cash for you would have been better investing it equally across the market all by yourself. I mean, the dartboard approach would have at least been on par. Seriously, these guys are well-compensated idiots. Blows my mind.
Wednesday, July 21, 2010
It's FinRegMageddon!!! Repent!!!
President Obama signed the Dodd-Frank Financial Regulation Reform Act into law Wednesday, beginning what will inevitably become a maelstrom of angry lobbying and political jockeying. Obama described the 2300 page behemoth as a “common sense approach to long-needed financial regulation”. I don’t know about you, but ‘common sense’ usually doesn’t need to be explained in a tome about twice the length of Tolstoy’s War and Peace.
Maybe grandma was just more succinct in her common sense verbiage than lawmakers. Who knows.
And the unintended consequences have already started. Amongst other changes, ratings agencies will be held more accountable for the ratings they apply to certain institutions and financial products. So, many of the nation’s top ratings agencies have hired a small army of lawyers to sift through the pages of the bill and, until they satisfactorily understand the many nuances held within, have declared they aren’t going to do anything. A complete standstill. Can’t really blame them for wanting to know where the mines are before they go skipping through the brand new minefield.
Big Ben Bernanke, our fearless Federal Reserve Chairman, spoke to Congress Wednesday citing that we are going through a period of ’Unusual uncertainty’. Yeah. That’s the kind of soothing talk that calms everyone down. Stocks took a whack as a result.
Evidently loan default knows no income boundaries. In a recent survey it was noted that 1 in every 7 mortgages of $1,000,000.00 and greater was categorized as ‘seriously delinquent’ while matched by only 1 in 12 of those below the 1 mil mark. Those lazy rich people. Don’t they know that this kind of behavior could cost their corporate CEO golfing buddies their semi-annual bonuses? For shame. Now who will pay for the scotch and hookers?
Tons of mortgage lenders are turning down loans because of women taking maternity leave, saying that there is no guarantee that they will go back to work. Prospective mothers out there, I have some strong language for you: how dare you include Junior in the American dream? This is a free market. If your baby wants a home, they can get a job and earn one.
And, as if Florida being at the tip-top of the list for states involved in mortgage fraud wasn’t enough, we have a new feather to put in our community’s cap: a recent study by CoreLogic Inc. named Orlando as one of the cities in America with the highest incidence of mortgage fraud. I’m not saying everyone other than me is out to get you, but everyone other than me is out to get you.
You heard me.
Maybe grandma was just more succinct in her common sense verbiage than lawmakers. Who knows.
And the unintended consequences have already started. Amongst other changes, ratings agencies will be held more accountable for the ratings they apply to certain institutions and financial products. So, many of the nation’s top ratings agencies have hired a small army of lawyers to sift through the pages of the bill and, until they satisfactorily understand the many nuances held within, have declared they aren’t going to do anything. A complete standstill. Can’t really blame them for wanting to know where the mines are before they go skipping through the brand new minefield.
Big Ben Bernanke, our fearless Federal Reserve Chairman, spoke to Congress Wednesday citing that we are going through a period of ’Unusual uncertainty’. Yeah. That’s the kind of soothing talk that calms everyone down. Stocks took a whack as a result.
Evidently loan default knows no income boundaries. In a recent survey it was noted that 1 in every 7 mortgages of $1,000,000.00 and greater was categorized as ‘seriously delinquent’ while matched by only 1 in 12 of those below the 1 mil mark. Those lazy rich people. Don’t they know that this kind of behavior could cost their corporate CEO golfing buddies their semi-annual bonuses? For shame. Now who will pay for the scotch and hookers?
Tons of mortgage lenders are turning down loans because of women taking maternity leave, saying that there is no guarantee that they will go back to work. Prospective mothers out there, I have some strong language for you: how dare you include Junior in the American dream? This is a free market. If your baby wants a home, they can get a job and earn one.
And, as if Florida being at the tip-top of the list for states involved in mortgage fraud wasn’t enough, we have a new feather to put in our community’s cap: a recent study by CoreLogic Inc. named Orlando as one of the cities in America with the highest incidence of mortgage fraud. I’m not saying everyone other than me is out to get you, but everyone other than me is out to get you.
You heard me.
Wednesday, July 7, 2010
Since when do facts matter in politics?
I always like to start these newsletters with a joke. Something fun to lighten the mood. And, in all my research, I couldn’t find any joke funnier than Republican party leader Michael Steele’s quote about the Afghanistan war: “Keep in mind again, for our federal candidates, this is a war of Obama’s choos-ing.”
BWAAAAA HAAA HA HA HA HAAAAAAAAAAAAA!!!!!!!!!!!
Seriously, guy? You said this in public? I wouldn’t recommend even muttering it quietly to yourself, but out loud on camera? Evidently his Tourette’s got the best of him. I wonder exactly how much bling-bling this little faux pas is going to cost him in political capital.
The unemployment rate ticked a couple notches down to 9.5% while the economy shed another 125,000 jobs. The job loss culprit: planned layoffs from the seasonal census workers. In related news, Congress opted not to extend unemployment benefits from 52 weeks to 2 years, citing budget re¬straints and dis-incentivizing the workforce as the primary drivers of that decision. There is a ton of political jockeying going on in D.C. right now and both sides of the argument are very emotionally charged.
Translation: I’m not touching this one with a 10-foot pole.
The Agricultural Bank of China (ABC) is set to have the biggest initial public offering in history soon at approximately 22 billion in value. This means that our hedge funds can now use the money we bor-rowed from China to invest into China’s banking system so China is better capitalized to... lend us more money? I’m getting dizzy. And somehow broker.
The $8000 1st time homebuyer tax credit was extended recently, moving the mandatory closing date back from June 30th to September 30th. Unfortunately, you still had to be under contract by April 30th to qualify. This is a shining example of how constipated the mortgage lending system is right now dealing with the piles of legal red tape and distressed properties we’re stuck with. Slow goings.
Tar balls have officially washed ashore on Cocoa Beach, but scientists are inconclusive as to where they could have come from. Let me give you kids a hint: it starts with “B” and ends in “P’s massive gushing screw-up in the Gulf”. But at least BP is a ‘week ahead of schedule’ in building a relief wall.
I love the media spin. Fills me with an empty sense of false hope, which is all I need to distract me from the untold sums of dead marine life, irreparably ravaged ecosystems and eventual cataclysmic toll on Florida’s tourism economy. Ignorance is oil-covered bliss.
BWAAAAA HAAA HA HA HA HAAAAAAAAAAAAA!!!!!!!!!!!
Seriously, guy? You said this in public? I wouldn’t recommend even muttering it quietly to yourself, but out loud on camera? Evidently his Tourette’s got the best of him. I wonder exactly how much bling-bling this little faux pas is going to cost him in political capital.
The unemployment rate ticked a couple notches down to 9.5% while the economy shed another 125,000 jobs. The job loss culprit: planned layoffs from the seasonal census workers. In related news, Congress opted not to extend unemployment benefits from 52 weeks to 2 years, citing budget re¬straints and dis-incentivizing the workforce as the primary drivers of that decision. There is a ton of political jockeying going on in D.C. right now and both sides of the argument are very emotionally charged.
Translation: I’m not touching this one with a 10-foot pole.
The Agricultural Bank of China (ABC) is set to have the biggest initial public offering in history soon at approximately 22 billion in value. This means that our hedge funds can now use the money we bor-rowed from China to invest into China’s banking system so China is better capitalized to... lend us more money? I’m getting dizzy. And somehow broker.
The $8000 1st time homebuyer tax credit was extended recently, moving the mandatory closing date back from June 30th to September 30th. Unfortunately, you still had to be under contract by April 30th to qualify. This is a shining example of how constipated the mortgage lending system is right now dealing with the piles of legal red tape and distressed properties we’re stuck with. Slow goings.
Tar balls have officially washed ashore on Cocoa Beach, but scientists are inconclusive as to where they could have come from. Let me give you kids a hint: it starts with “B” and ends in “P’s massive gushing screw-up in the Gulf”. But at least BP is a ‘week ahead of schedule’ in building a relief wall.
I love the media spin. Fills me with an empty sense of false hope, which is all I need to distract me from the untold sums of dead marine life, irreparably ravaged ecosystems and eventual cataclysmic toll on Florida’s tourism economy. Ignorance is oil-covered bliss.
Thursday, July 1, 2010
The news networks that cried wolf
Aside from video-taping people walking the streets wearing “The End Is Near” Sharpied onto poster-board, talking heads are spouting double-dip recession as loudly as they can in the wake of a 10% loss on the Dow Jones Industrial Average (a big stock market indicator) in the 2nd quarter of 2010.
The infamous double-dip. The thing that gets someone else’s spit all up in your honey mustard sauce. That’ll teach you for sharing the McNuggets.
Well, call me the blind optimist, but I am royally sick of hearing about America’s inevitable future plunge into the recesses of economic oblivion. Yes, I will be the first to admit that we’ve clearly hit a patch of soft economic data. The jobs report (beginning with the ADP jobs report which already sucked at the time of writing and finishing with Thursday’s jobless claims and Friday’s payroll employment reports) is, as our Spanish-speaking friends say, muy no bueno. Our nation’s gross domestic product was also recently revised downward to a modest 2.7% growth in Q1 ‘10.
But to debunk the doomsday theories kids and kidettes, realize it’s a bunch of scared, overly threatened fund managers running the markets in wildly turbulent political times amidst an international debt crisis. Things are going to be a tad choppy coming out of this quagmire. And news networks sell a hell of a lot of advertising space when they’re predicting Armageddon prematurely.
Ask yourself: have you seen a significant change in those around you in the past 6 months? About the same number of unemployed friends? People settling into a more conservative, maintainable pattern of spending? Same old ‘We’re broke, but we’re happy!’ jokes floating around?
Yeah. We’ve flattened out. We’re not plummeting to our doom. We’re chillin’. Recouping.
And just what is the major catalyst behind this latest market correction? Crappy numbers coming out of China. Their industry has evidently slowed down dramatically. Well, NO KIDDING. Customer Numero Uno (that’s us, people) has tightened up the ol’ bootstraps. Get a clue.
In other news , evidently Larry King is retiring. I’d probably care if I was older.
USA got beat by Ghana 2-1 in overtime, punting us corner-kick style from the World Cup. I’d probably care if I was... I dunno, not American? 3rd World-ican, maybe? I’m just glad to be able to permanently remove the word Vuvuzela from my mental dictionary. Good riddance, evil bee noise.
Hurricane Alex is slowing down the Gulf oil clean-up effort, but Americans have such short attention spans that we’ve already forgotten about it anyway. By the way, just for grins and giggles, go ahead and back your truck into a fire hydrant and watch the subsequent plume of water that comes up. Yeah. That’s going on at the bottom of the friggin’ ocean, only way bigger and it’s oil. Totally awesome.
And, to close on a happy note, massive financial regulation is going to be upon us once the Senate gets their act together. I assure you I will drone on about this for a good couple of newsletters, so for now let’s just say that Wall Street is probably going to be pissed. Fun times.
The infamous double-dip. The thing that gets someone else’s spit all up in your honey mustard sauce. That’ll teach you for sharing the McNuggets.
Well, call me the blind optimist, but I am royally sick of hearing about America’s inevitable future plunge into the recesses of economic oblivion. Yes, I will be the first to admit that we’ve clearly hit a patch of soft economic data. The jobs report (beginning with the ADP jobs report which already sucked at the time of writing and finishing with Thursday’s jobless claims and Friday’s payroll employment reports) is, as our Spanish-speaking friends say, muy no bueno. Our nation’s gross domestic product was also recently revised downward to a modest 2.7% growth in Q1 ‘10.
But to debunk the doomsday theories kids and kidettes, realize it’s a bunch of scared, overly threatened fund managers running the markets in wildly turbulent political times amidst an international debt crisis. Things are going to be a tad choppy coming out of this quagmire. And news networks sell a hell of a lot of advertising space when they’re predicting Armageddon prematurely.
Ask yourself: have you seen a significant change in those around you in the past 6 months? About the same number of unemployed friends? People settling into a more conservative, maintainable pattern of spending? Same old ‘We’re broke, but we’re happy!’ jokes floating around?
Yeah. We’ve flattened out. We’re not plummeting to our doom. We’re chillin’. Recouping.
And just what is the major catalyst behind this latest market correction? Crappy numbers coming out of China. Their industry has evidently slowed down dramatically. Well, NO KIDDING. Customer Numero Uno (that’s us, people) has tightened up the ol’ bootstraps. Get a clue.
In other news , evidently Larry King is retiring. I’d probably care if I was older.
USA got beat by Ghana 2-1 in overtime, punting us corner-kick style from the World Cup. I’d probably care if I was... I dunno, not American? 3rd World-ican, maybe? I’m just glad to be able to permanently remove the word Vuvuzela from my mental dictionary. Good riddance, evil bee noise.
Hurricane Alex is slowing down the Gulf oil clean-up effort, but Americans have such short attention spans that we’ve already forgotten about it anyway. By the way, just for grins and giggles, go ahead and back your truck into a fire hydrant and watch the subsequent plume of water that comes up. Yeah. That’s going on at the bottom of the friggin’ ocean, only way bigger and it’s oil. Totally awesome.
And, to close on a happy note, massive financial regulation is going to be upon us once the Senate gets their act together. I assure you I will drone on about this for a good couple of newsletters, so for now let’s just say that Wall Street is probably going to be pissed. Fun times.
Friday, June 25, 2010
Greece got junked, China's now floating and America advances in the World Cup
The U.S.A. and England have moved from “in a relationship” to “it’s complicated” over the one-two punch of BP’s massive oil spill trashing the Gulf of Mexico (now holding the esteemed “greatest American ecological disaster” slot) and our 1-1 tie in the first game of the World Cup.
Facebook status joke? You betta’ believe.
And as if Europe wasn’t interesting enough, bond ratings agency Moody’s downgraded Greece’s debt to near junk bond levels last Monday. That’s gotta be a fun way to start your week for Greece’s finan¬cial overseers. Market reaction was kept muted due to the fact that everyone who had access to CNBC knew this was coming for a while. The effect was essentially already baked in to investor portfolios. Still, it is another click that Europe’s sovereign debt crisis moved towards the abyss of long-term eco-nomic malaise, tighter austerity measures and a Japan-esque lost decade.
Existing home sales posted a surprising 2.2% loss in May despite the bump from the $8000 tax credit. New home sales took a much more substantial tumble, dropping 32.7% month-over-month. Home demand is tightly tethered to the employment situation, and as unemployment grinds along at near 10% levels it is going to stifle any sort of skyrocketing good news. Still, the trend for home sales has been tepidly positive for the past 12 months. And this may be the impetus needed to get more Federal attention to the still fragile housing market.
The Federal Reserve Open Market Committee Meeting ended on Wednesday. Nothing happened. Economy is still rough. Biiiiiiiiiiiiiiig shocker there.
China has announced that they are going to allow the value of their currency to float along with the free market. This is a big deal. For years and years, China held the value of their currency at artifi¬cially low levels. Why would they do that? I think a better question is: why do we keep buying stuff that says ‘Made in China’ on the bottom? Because it’s cheap. And why were all products coming from China so consistently cheap?
Go ahead, take a guess.
If you guessed that their currency manipulation had something huge to do with it, give yourself a round of applause and take yourself out for a sandwich. You’ve earned it.
Congress is having a fun time battling over the many nuances of the proposed financial regulation re-form bill. I have heard more talking heads blather on about this bill, some claiming it will benefit banks at the expense of the taxpayer and some announcing the polar opposite outcome. My guess is that it’s gonna be a whole lot like the Health Care reform bill: no one really knows what’s going on and everyone’s going to find a reason to be angry about it.
Ah, hope and change.
Facebook status joke? You betta’ believe.
And as if Europe wasn’t interesting enough, bond ratings agency Moody’s downgraded Greece’s debt to near junk bond levels last Monday. That’s gotta be a fun way to start your week for Greece’s finan¬cial overseers. Market reaction was kept muted due to the fact that everyone who had access to CNBC knew this was coming for a while. The effect was essentially already baked in to investor portfolios. Still, it is another click that Europe’s sovereign debt crisis moved towards the abyss of long-term eco-nomic malaise, tighter austerity measures and a Japan-esque lost decade.
Existing home sales posted a surprising 2.2% loss in May despite the bump from the $8000 tax credit. New home sales took a much more substantial tumble, dropping 32.7% month-over-month. Home demand is tightly tethered to the employment situation, and as unemployment grinds along at near 10% levels it is going to stifle any sort of skyrocketing good news. Still, the trend for home sales has been tepidly positive for the past 12 months. And this may be the impetus needed to get more Federal attention to the still fragile housing market.
The Federal Reserve Open Market Committee Meeting ended on Wednesday. Nothing happened. Economy is still rough. Biiiiiiiiiiiiiiig shocker there.
China has announced that they are going to allow the value of their currency to float along with the free market. This is a big deal. For years and years, China held the value of their currency at artifi¬cially low levels. Why would they do that? I think a better question is: why do we keep buying stuff that says ‘Made in China’ on the bottom? Because it’s cheap. And why were all products coming from China so consistently cheap?
Go ahead, take a guess.
If you guessed that their currency manipulation had something huge to do with it, give yourself a round of applause and take yourself out for a sandwich. You’ve earned it.
Congress is having a fun time battling over the many nuances of the proposed financial regulation re-form bill. I have heard more talking heads blather on about this bill, some claiming it will benefit banks at the expense of the taxpayer and some announcing the polar opposite outcome. My guess is that it’s gonna be a whole lot like the Health Care reform bill: no one really knows what’s going on and everyone’s going to find a reason to be angry about it.
Ah, hope and change.
Monday, May 3, 2010
There's too much noise to hear what's really going on
The Sunshine State takes the gold once again! Florida is #1 in the nation for mortgage fraud cases. So, not saying anything bad about my competition, but if you decide to seek financing from someone you don’t necessarily know and trust it may not end well.
Which is why you have such a trustworthy and handsome guy like me to handle all of that for you.
So the Gulf of Mexico is bleeding oil. Lots and lots of oil. Enough to get Obama to put a temporary hiatus on his offshore drilling expansion. I expect this to move oil prices up. And, since every product in creation needs to be shipped in some form or fashion, expect that added gas cost to trickle down to higher consumer prices. Because you and I are supposed to pay for all the world’s problems. Fun.
Greece received it’s much needed bailout from the European Union and the International Monetary Fund. The price tag is 110 billion Euros (approximately $146 billion) with 28% of the cash coming from Germany. This also means that the IMF and the EU get to start calling the shots as far as the allocation of those funds goes. And the Greek population is not entirely thrilled with the idea of being told what to do with their resources.
So, of course, a lot of them did the only logical thing they could do: they took to the streets and rioted. Which reminds us of the wise axiom “When in doubt, grab a sledgehammer and deface some poor shmo’s business.” Awesome, guys. Very patriotic.
On the home front, closed home sales soared upwards 26.9% (measured by closed transactions) which represents the biggest percentage increase in that metric since 1963. To be fair, it was coming off of a very low point, but regardless I’m a big fan of this trend. It brings hope that the housing turnaround is starting to catch some serious tread which is good news for home prices.
Gross Domestic Product in the 1st quarter of 2010 moved up 3.2% on an annualized basis, softening from the 5.6% growth we saw in 4th quarter 2009. However, these days a plus is a plus and I’ll take it.
Okay okay okay. So the numbers that are coming in lately are good. I don’t think anyone’s arguing that. Stocks are positive, growth is good, jobs are starting to grow again, etc. The question we need to be asking ourselves right now is ‘what are these numbers really worth amidst all of this stimulus-fueled noise?’ Our government has taken so many extreme and unconventional actions in stimulating our economy that the statistics we observe to gauge our progress may be massively upwardly biased.
Put another way, just because you’re energetic after 17 Red Bulls doesn’t mean you are a naturally energetic person.
So, I am thinking the next couple of quarters will be particularly indicative of the legitimate healing that has taken place in our economy. The Fed has closed all but one of the specialty financing programs they rolled out to combat the liquidity crunch of 2008. Aside from interest rates being held at a low level, America is slowly coming off of financial life-support.
Let’s hope her ticker can keep on tickin’ by itself.
Which is why you have such a trustworthy and handsome guy like me to handle all of that for you.
So the Gulf of Mexico is bleeding oil. Lots and lots of oil. Enough to get Obama to put a temporary hiatus on his offshore drilling expansion. I expect this to move oil prices up. And, since every product in creation needs to be shipped in some form or fashion, expect that added gas cost to trickle down to higher consumer prices. Because you and I are supposed to pay for all the world’s problems. Fun.
Greece received it’s much needed bailout from the European Union and the International Monetary Fund. The price tag is 110 billion Euros (approximately $146 billion) with 28% of the cash coming from Germany. This also means that the IMF and the EU get to start calling the shots as far as the allocation of those funds goes. And the Greek population is not entirely thrilled with the idea of being told what to do with their resources.
So, of course, a lot of them did the only logical thing they could do: they took to the streets and rioted. Which reminds us of the wise axiom “When in doubt, grab a sledgehammer and deface some poor shmo’s business.” Awesome, guys. Very patriotic.
On the home front, closed home sales soared upwards 26.9% (measured by closed transactions) which represents the biggest percentage increase in that metric since 1963. To be fair, it was coming off of a very low point, but regardless I’m a big fan of this trend. It brings hope that the housing turnaround is starting to catch some serious tread which is good news for home prices.
Gross Domestic Product in the 1st quarter of 2010 moved up 3.2% on an annualized basis, softening from the 5.6% growth we saw in 4th quarter 2009. However, these days a plus is a plus and I’ll take it.
Okay okay okay. So the numbers that are coming in lately are good. I don’t think anyone’s arguing that. Stocks are positive, growth is good, jobs are starting to grow again, etc. The question we need to be asking ourselves right now is ‘what are these numbers really worth amidst all of this stimulus-fueled noise?’ Our government has taken so many extreme and unconventional actions in stimulating our economy that the statistics we observe to gauge our progress may be massively upwardly biased.
Put another way, just because you’re energetic after 17 Red Bulls doesn’t mean you are a naturally energetic person.
So, I am thinking the next couple of quarters will be particularly indicative of the legitimate healing that has taken place in our economy. The Fed has closed all but one of the specialty financing programs they rolled out to combat the liquidity crunch of 2008. Aside from interest rates being held at a low level, America is slowly coming off of financial life-support.
Let’s hope her ticker can keep on tickin’ by itself.
Friday, April 16, 2010
Never bet on Girl Scouts in the NFL. It just doesn't work out well.
Another week, another smattering of economic insanity to report. Those kids on Wall Street do a good job of keeping my newsletter-writing life easy.
Goldman Sachs, an investment bank that we heard a lot about while the sky was falling in late 2008 has been charged with some severe underhandedness. They have been accused of evidently allowing Paulson & Co. (a big ol’ hedge fund) to “advise” Goldman about structuring an investment portfolio out of the crappiest of the crappy subprime mortgage-backed securities. Paulson promptly bet against that very portfolio. When the portfolio tanked, Paulson & Co. made a gigantic profit.
Basically, that’s like making a football team out of girl scouts, telling the people that fund the team that they’re really 300 lb. gorillas, and betting everything against them. Quite a dickish move.
Though it would be satisfying to see a team of girl scouts try to play in the NFL. Take THAT for charging me six bucks for a box of thin mints. Stupid delicious addictive cookies.
What will inevitably result from this alleged fiasco? Regulatory reform. And lots of it. Whether that is a good thing or a bad thing is up to politicians to decide, but I for one do not like the idea of corporate fat-cats defrauding the investing public. Just my opinion.
Florida is making headlines again for how awful we are. By recent numbers, we are in 5th place nationwide for unemployment (12.3%) and 3rd in foreclosure rates (1 in 57 homes in in foreclosure). We’re slowly moving up in the world, friends. On the bright side, there will be a lot of vacant properties for people to squat in while they’re unemployed.
Speaking of foreclosures, the pace of foreclosures is accelerating. As a country, we’re up 25% from where we were a year ago this month. Despite what you may think, it is not because more people are feeling the financial squeeze and just falling behind. The major driver is that banks can now financially handle the losses of re-acquiring these properties.
Essentially we bailed out the banks with our tax money and now they have enough cash to hire people to take our homes from us and handle the on-book losses that those foreclosures represent. Yay!
Wait… no. Not yay. Not yay at all. The opposite of yay. Booooooo.
To stem the tide of foreclosures, Washington is shaking their stick at banks and bank investors to allow principal writedowns on underwater mortgages. Of course, it’s not happening. So, in a phenomenon called strategic foreclosure, people who owe more than their home is worth are walking away, dropping home prices and putting more people in the “underwater” group. Lather, rinse, repeat.
Not my rosiest report, but it is what it is. I’ll report happy things when the world gives me happy things to report.
Goldman Sachs, an investment bank that we heard a lot about while the sky was falling in late 2008 has been charged with some severe underhandedness. They have been accused of evidently allowing Paulson & Co. (a big ol’ hedge fund) to “advise” Goldman about structuring an investment portfolio out of the crappiest of the crappy subprime mortgage-backed securities. Paulson promptly bet against that very portfolio. When the portfolio tanked, Paulson & Co. made a gigantic profit.
Basically, that’s like making a football team out of girl scouts, telling the people that fund the team that they’re really 300 lb. gorillas, and betting everything against them. Quite a dickish move.
Though it would be satisfying to see a team of girl scouts try to play in the NFL. Take THAT for charging me six bucks for a box of thin mints. Stupid delicious addictive cookies.
What will inevitably result from this alleged fiasco? Regulatory reform. And lots of it. Whether that is a good thing or a bad thing is up to politicians to decide, but I for one do not like the idea of corporate fat-cats defrauding the investing public. Just my opinion.
Florida is making headlines again for how awful we are. By recent numbers, we are in 5th place nationwide for unemployment (12.3%) and 3rd in foreclosure rates (1 in 57 homes in in foreclosure). We’re slowly moving up in the world, friends. On the bright side, there will be a lot of vacant properties for people to squat in while they’re unemployed.
Speaking of foreclosures, the pace of foreclosures is accelerating. As a country, we’re up 25% from where we were a year ago this month. Despite what you may think, it is not because more people are feeling the financial squeeze and just falling behind. The major driver is that banks can now financially handle the losses of re-acquiring these properties.
Essentially we bailed out the banks with our tax money and now they have enough cash to hire people to take our homes from us and handle the on-book losses that those foreclosures represent. Yay!
Wait… no. Not yay. Not yay at all. The opposite of yay. Booooooo.
To stem the tide of foreclosures, Washington is shaking their stick at banks and bank investors to allow principal writedowns on underwater mortgages. Of course, it’s not happening. So, in a phenomenon called strategic foreclosure, people who owe more than their home is worth are walking away, dropping home prices and putting more people in the “underwater” group. Lather, rinse, repeat.
Not my rosiest report, but it is what it is. I’ll report happy things when the world gives me happy things to report.
Saturday, April 10, 2010
It's time for the lightning round
Lots of stuff happened in the world recently, so strap in. I’m going to do my best to hit the lion’s share of them. I’ll do my best not to belabor any points.
Greece is apparently going to be bailed out of their deep debt crisis with the assistance of Germany. In repayment, all gyros from this day forward will now be made with bratwursts and served with beer.
We’ve managed to add jobs to the economy to the tune of about 162,000 according to the preliminary non-farm payrolls report on Good Friday. The unemployment rate held steady at 9.7%. Admittedly, we’d need to stack about 5-8 years of job growth like this to get back to where we were before the recession began, but you’ve gotta start somewhere. Yay America.
The stock market is flirting with 11,000 points on the Dow and the Fed has recently finished their direct bond purchasing program. This is a one-two punch to bond prices, which ultimately trickles down into higher interest rates at the consumer level. However, bonds have shown an exceptional resiliency (many investors are still choosing to purchase bonds over stocks) indicating that everyone’s kinda still nervous about this global economic recovery (they’re worried that stocks could still take a dive).
Obama went to Prague and signed a landmark treaty with Russia agreeing to reduce each of our respective nuclear inventories by approximately one-third. There’s a lot of politics surrounding this decision, but at the very least I think we can all agree that a world with fewer nukes is a good thing.
Unless aliens attack. Then we’ll be sorry.
China posted their first trade deficit in 6 years. Their economy is growing between 9-10% annually, so I am not thrillingly surprised that they are shifting into the role of another major consumer nation. Maybe now we can start manufacturing cheap knock-offs of their stuff and selling it back to them. Oh, sweet irony.
The rise in gas prices seems to have turned from a walk to a gallop. Some of that can be blamed on the weakness of the dollar as a result of our recent money printing bonanza; some of it can be attributed to investors betting on a recovery and driving up demand in oil futures; some of it is higher demand at the consumer level. Regardless of the reason, let us not forget how crappy $4.00/gal gas is.
The first-time homebuyer’s tax credit in set to expire on April 30th. I’d love to give you the whole “act now!” spiel, but I have noticed that first time homebuyers don’t like to make massive life decisions in a hurried fashion. So, those of you who have contracts in, bravo for taking advantage of Uncle Sam’s offer. Those of you who are still house-hunting, the time is quickly approaching for you to make a decision. And for those of you who haven’t started yet but want to, I’d suggest you get on the phone with me right now because we don’t have a lot of time to spare.
Greece is apparently going to be bailed out of their deep debt crisis with the assistance of Germany. In repayment, all gyros from this day forward will now be made with bratwursts and served with beer.
We’ve managed to add jobs to the economy to the tune of about 162,000 according to the preliminary non-farm payrolls report on Good Friday. The unemployment rate held steady at 9.7%. Admittedly, we’d need to stack about 5-8 years of job growth like this to get back to where we were before the recession began, but you’ve gotta start somewhere. Yay America.
The stock market is flirting with 11,000 points on the Dow and the Fed has recently finished their direct bond purchasing program. This is a one-two punch to bond prices, which ultimately trickles down into higher interest rates at the consumer level. However, bonds have shown an exceptional resiliency (many investors are still choosing to purchase bonds over stocks) indicating that everyone’s kinda still nervous about this global economic recovery (they’re worried that stocks could still take a dive).
Obama went to Prague and signed a landmark treaty with Russia agreeing to reduce each of our respective nuclear inventories by approximately one-third. There’s a lot of politics surrounding this decision, but at the very least I think we can all agree that a world with fewer nukes is a good thing.
Unless aliens attack. Then we’ll be sorry.
China posted their first trade deficit in 6 years. Their economy is growing between 9-10% annually, so I am not thrillingly surprised that they are shifting into the role of another major consumer nation. Maybe now we can start manufacturing cheap knock-offs of their stuff and selling it back to them. Oh, sweet irony.
The rise in gas prices seems to have turned from a walk to a gallop. Some of that can be blamed on the weakness of the dollar as a result of our recent money printing bonanza; some of it can be attributed to investors betting on a recovery and driving up demand in oil futures; some of it is higher demand at the consumer level. Regardless of the reason, let us not forget how crappy $4.00/gal gas is.
The first-time homebuyer’s tax credit in set to expire on April 30th. I’d love to give you the whole “act now!” spiel, but I have noticed that first time homebuyers don’t like to make massive life decisions in a hurried fashion. So, those of you who have contracts in, bravo for taking advantage of Uncle Sam’s offer. Those of you who are still house-hunting, the time is quickly approaching for you to make a decision. And for those of you who haven’t started yet but want to, I’d suggest you get on the phone with me right now because we don’t have a lot of time to spare.
Wednesday, March 31, 2010
Sunrise, sunset
Well, here we are at the end of the 1st quarter of 2010. How are those resolutions coming along?
Yeah, I don’t remember mine either.
However, in my world of mortgage finance, this is a pretty crucial time. Starting in 2009, the Federal Reserve was kind enough to step into the bond market and purchase $1.25 trillion in mortgage-backed securities. What did that accomplish aside from adding one-and-a-quarter-trillion on the national debt?
Allow me to educate you.
Mortgage-backed securities are basically bonds that are backed by immense pools of mortgages. Individuals and institutions can invest in these, just like investing in municipal bonds, treasury bonds, etc. If demand goes up for the bonds, the bond issuers can offer lower rates of interest. If demand goes down for bonds, the issuers need to jack up the interest rate in order to ‘sweeten the deal’ and get new investors to buy them up.
As these bond interest rates move up and down, the interest rates offered on the mortgages that will eventually back them up move up and down in lock step. So, Uncle Sam basically dropped a chunk of change to make sure that the mortgage interest rates that handsome brokers like me can offer to you got low and stayed low in an attempt to convince you guys that buying a house is a good idea.
Now that program has ended. So, we removed a huge source of demand from the market. As you can guess, many believe that interest rates have nowhere to go but up. I would tend to agree. But it’s not going to happen all at once. Over the spring and summer we will see a slow but steady march from the low 5’s on a 30 year fixed to the mid to high 5’s.
Combine that with the expiration of the homebuyer tax credit ($8000 for 1st-timers, $6500 for move-uppers) happening on April 30th (the deadline to have a signed contract by) and it’s safe to say that we’re seeing on of the most advantageous times to purchase a home slowly slip through our fingers.
Many are out there flapping their gums about extensions to the programs and new supplementary programs to come in and replace the old ones. I wouldn’t be surprised if this proved to be true, but I certainly wouldn’t count on it. Political pressures to reel in spending and to focus on other issues have become immense. That isn’t to say the good times are completely over. Just the good-er times.
Sunrise, sunset, I suppose.
Yeah, I don’t remember mine either.
However, in my world of mortgage finance, this is a pretty crucial time. Starting in 2009, the Federal Reserve was kind enough to step into the bond market and purchase $1.25 trillion in mortgage-backed securities. What did that accomplish aside from adding one-and-a-quarter-trillion on the national debt?
Allow me to educate you.
Mortgage-backed securities are basically bonds that are backed by immense pools of mortgages. Individuals and institutions can invest in these, just like investing in municipal bonds, treasury bonds, etc. If demand goes up for the bonds, the bond issuers can offer lower rates of interest. If demand goes down for bonds, the issuers need to jack up the interest rate in order to ‘sweeten the deal’ and get new investors to buy them up.
As these bond interest rates move up and down, the interest rates offered on the mortgages that will eventually back them up move up and down in lock step. So, Uncle Sam basically dropped a chunk of change to make sure that the mortgage interest rates that handsome brokers like me can offer to you got low and stayed low in an attempt to convince you guys that buying a house is a good idea.
Now that program has ended. So, we removed a huge source of demand from the market. As you can guess, many believe that interest rates have nowhere to go but up. I would tend to agree. But it’s not going to happen all at once. Over the spring and summer we will see a slow but steady march from the low 5’s on a 30 year fixed to the mid to high 5’s.
Combine that with the expiration of the homebuyer tax credit ($8000 for 1st-timers, $6500 for move-uppers) happening on April 30th (the deadline to have a signed contract by) and it’s safe to say that we’re seeing on of the most advantageous times to purchase a home slowly slip through our fingers.
Many are out there flapping their gums about extensions to the programs and new supplementary programs to come in and replace the old ones. I wouldn’t be surprised if this proved to be true, but I certainly wouldn’t count on it. Political pressures to reel in spending and to focus on other issues have become immense. That isn’t to say the good times are completely over. Just the good-er times.
Sunrise, sunset, I suppose.
Monday, March 22, 2010
The feathers will fly
Health care reform is upon us, people. On Sunday evening the House passed the health care reform bill on a 219-212 vote. This is a hotly debated topic, but rest assured that whatever your opinion on the matter is, I agree 100%. And the people who disagree with you and me are terrible and wrong.
To be frank, I’m just glad that this coronary clog in our legislative process has finally been dislodged and we can get our elected officials worrying a little more about financial market reform, which is the next item up for bids.
What will become of our economy in the wake of this history-making legislation? I haven’t the foggiest. There has been so much tumult, pandemonium, hullabaloo, cacophony and other synonyms for noise (thank you thesaurus.com) that I have no idea WHAT sort of impact this is going to have on our economy. And given the fact that the right-wing is sharpening their legal battle-axe to try and undo the bill, chances are that nobody really has a firm grasp as to what the future holds.
Aside from some emotion-fueled, fact-bending, ultimatum-babbling fun from the news pundits on both sides of the fence. That we know for sure will happen.
Another noteworthy event from last week is the Federal Open Market Committee meeting and interest rates decision. Once again, nothing happened. Rates remain where they are, rhetoric didn’t change one iota, the same guy dissented with the decision. Blah. But, sometimes ‘steady as she goes’ is worthy of a market reaction. In this case, it was.
You see, many economic analysts are afraid that this Fed is going to be too ‘dovish’ as opposed to ‘hawkish’ in their monetary policy. For those of us who don’t understand these aviary terms, let me shine some light. Hawkish means that the Fed will be more concerned with fighting inflation (through a tighter money supply and higher interest rates) at the potential cost of restraining economic growth. Dovish means that the Fed will keep money flowing and rates low in an effort to spurn economic growth and consumption at the risk of sparking commodity and cost inflation.
Inflation is the ultimate tax. It results from too many dollars chasing too few products. If stuff gets more expensive at every level then everyone feels it. Need I remind you of how fun $4.00/gallon gasoline was? In the same respect, an unemployment rate that is a hair below double-digits is a big concern too. So what is the ‘correct’ answer? Yeah, I don’t know either. And it is because of Catch-22’s like this that I have no interest in running for any office of any kind.
Ben Bernanke (our fearless Federal Reserve chairman) is a student of the Great Depression. His doctoral thesis was all about how it came about and why it persisted for so long. The general consensus is that overly hawkish policy at that time caused our then fragile economy to slip back into another downward spiral. Ben will be damned if he is about to repeat the same mistake. So, it stands to reason that our financial futures rest on the wings of a dove.
Let’s all hope that it’s a smart dove. Because most doves I’ve seen outside are pretty dumb.
To be frank, I’m just glad that this coronary clog in our legislative process has finally been dislodged and we can get our elected officials worrying a little more about financial market reform, which is the next item up for bids.
What will become of our economy in the wake of this history-making legislation? I haven’t the foggiest. There has been so much tumult, pandemonium, hullabaloo, cacophony and other synonyms for noise (thank you thesaurus.com) that I have no idea WHAT sort of impact this is going to have on our economy. And given the fact that the right-wing is sharpening their legal battle-axe to try and undo the bill, chances are that nobody really has a firm grasp as to what the future holds.
Aside from some emotion-fueled, fact-bending, ultimatum-babbling fun from the news pundits on both sides of the fence. That we know for sure will happen.
Another noteworthy event from last week is the Federal Open Market Committee meeting and interest rates decision. Once again, nothing happened. Rates remain where they are, rhetoric didn’t change one iota, the same guy dissented with the decision. Blah. But, sometimes ‘steady as she goes’ is worthy of a market reaction. In this case, it was.
You see, many economic analysts are afraid that this Fed is going to be too ‘dovish’ as opposed to ‘hawkish’ in their monetary policy. For those of us who don’t understand these aviary terms, let me shine some light. Hawkish means that the Fed will be more concerned with fighting inflation (through a tighter money supply and higher interest rates) at the potential cost of restraining economic growth. Dovish means that the Fed will keep money flowing and rates low in an effort to spurn economic growth and consumption at the risk of sparking commodity and cost inflation.
Inflation is the ultimate tax. It results from too many dollars chasing too few products. If stuff gets more expensive at every level then everyone feels it. Need I remind you of how fun $4.00/gallon gasoline was? In the same respect, an unemployment rate that is a hair below double-digits is a big concern too. So what is the ‘correct’ answer? Yeah, I don’t know either. And it is because of Catch-22’s like this that I have no interest in running for any office of any kind.
Ben Bernanke (our fearless Federal Reserve chairman) is a student of the Great Depression. His doctoral thesis was all about how it came about and why it persisted for so long. The general consensus is that overly hawkish policy at that time caused our then fragile economy to slip back into another downward spiral. Ben will be damned if he is about to repeat the same mistake. So, it stands to reason that our financial futures rest on the wings of a dove.
Let’s all hope that it’s a smart dove. Because most doves I’ve seen outside are pretty dumb.
Thursday, March 11, 2010
Next stimulus package: Prozac for everyone!
As I sift through the various economic reports America has to offer on a monthly basis, I am filled with a unique, awkward kind of happiness. Looking at the numbers and smiling is kind of like being happy that your friend isn’t on fire anymore. You think “great, my buddy’s not burning anymore” right before you realize “man, my buddy’s pretty badly burnt regardless.” A morbid sense of comparable relief. Case and point, our country lost 36,000 jobs in February, which the markets referred to as a “positive” jobs report. I guess “less negative” is all we can find to celebrate over these days. Any excuse to crack a sixer of Pabst Blue Ribbon- I get it.
The fact of the matter is that a therapy composed of emergency stimulus and historically loose fiscal and monetary policy has brought our economy back from an economic cardiac arrest that could have critically wounded the American economy and our global competitiveness. Whether or not the measures implemented by our past and current administrations were the proverbial “lesser of two evils” we will never know.
Long story short: it wasn’t pretty, but it’s what we did. Love it or hate it, you can’t argue the fact that ‘it’ and it’s repercussions will define a generation. As such, we will have to navigate various side-effects over the coming months and years. Lemme give you an example:
We have a new battle brewing between mortgage insurance companies and the mortgage lenders whom they insure. It seems that the unprecedented number of loan defaults (because people can’t afford their mortgages or are upside-down and don’t care anymore) and corresponding insurance claims (because that is what mortgage insurance companies insure against) is causing MI companies to deny more claims than they normally do. Like, 25% of them as opposed to the historical average of 7%. They conjecture that these lenders misrepresented the loans in the 1st place and that they consequently don’t have to pay the claims.
Call me crazy, but isn’t this a conversation we should have had BEFORE we issued the insurance policy on the mortgage loan? But what the hell do I know anyway.
Well, of course both sides have hired an army of lawyers that they equipped with pitchforks and briefcases of money to battle for their respective causes. This is a still-progressing story, but I think we can all guess how it will end: badly.
This is just one of many examples of how we as a country are not out of the woods quite yet. Lots of folks are waiting with bated breath for the much-hyped end of the recession. News flash kids: it isn’t going to come riding a white horse to the trumpets of angels like many of us would want. It’s going to slowly and erratically grind towards incrementally more positive data one step at a time.
That’s where having a team of financial professionals comes into play. With all the volatility out there, it’s a good idea to surround yourself with people you trust who have information you need to help guide your family’s financial trajectory. So, if you see a news headline or have a water cooler conversation that raises questions, give me a call and we’ll talk about it. That’s what I’m here for.
The fact of the matter is that a therapy composed of emergency stimulus and historically loose fiscal and monetary policy has brought our economy back from an economic cardiac arrest that could have critically wounded the American economy and our global competitiveness. Whether or not the measures implemented by our past and current administrations were the proverbial “lesser of two evils” we will never know.
Long story short: it wasn’t pretty, but it’s what we did. Love it or hate it, you can’t argue the fact that ‘it’ and it’s repercussions will define a generation. As such, we will have to navigate various side-effects over the coming months and years. Lemme give you an example:
We have a new battle brewing between mortgage insurance companies and the mortgage lenders whom they insure. It seems that the unprecedented number of loan defaults (because people can’t afford their mortgages or are upside-down and don’t care anymore) and corresponding insurance claims (because that is what mortgage insurance companies insure against) is causing MI companies to deny more claims than they normally do. Like, 25% of them as opposed to the historical average of 7%. They conjecture that these lenders misrepresented the loans in the 1st place and that they consequently don’t have to pay the claims.
Call me crazy, but isn’t this a conversation we should have had BEFORE we issued the insurance policy on the mortgage loan? But what the hell do I know anyway.
Well, of course both sides have hired an army of lawyers that they equipped with pitchforks and briefcases of money to battle for their respective causes. This is a still-progressing story, but I think we can all guess how it will end: badly.
This is just one of many examples of how we as a country are not out of the woods quite yet. Lots of folks are waiting with bated breath for the much-hyped end of the recession. News flash kids: it isn’t going to come riding a white horse to the trumpets of angels like many of us would want. It’s going to slowly and erratically grind towards incrementally more positive data one step at a time.
That’s where having a team of financial professionals comes into play. With all the volatility out there, it’s a good idea to surround yourself with people you trust who have information you need to help guide your family’s financial trajectory. So, if you see a news headline or have a water cooler conversation that raises questions, give me a call and we’ll talk about it. That’s what I’m here for.
Sunday, February 28, 2010
Hi, my name is Greg and I am at your service
1st things 1st: The Carrabba’s Networking Happy Hour is this Tuesday night! All details can be found at www.GregWhiteside.com! Come on out and join us!
I want to devote this newsletter to clarifying what it is I do in real estate. It is my observation that some of you think I am a real estate agent, some think I’m an economic analyst, and a host of other things that aren’t quite accurate. So let me clear the air: I am a mortgage originator. It is my job to help people get loans to purchase a home or refinance one they already own. I do that by shopping multiple lenders on your behalf to find the one that has the lowest rate and the lowest closing costs.
But Greg, can’t I just go to my bank to get a loan? Yes, you certainly can. Unfortunately, the banker is limited to one bank with one set of loan products. So, depending on your situation, they may try to cram your file into a square-peg-round-hole type of situation because they simply lack the loan product that would work best for you. And, even if you have a squeaky clean financial background, I have premium lenders (available only through brokers) that offer premium pricing to top-notch files.
Also, keep in mind that interest rates change daily depending on global markets. On top of that, different banks can have the best rates on different days. Just as retail stores have different sales at different times, the bank with the “best rate” often changes. It is my job to keep track of all of that confusion for you and help you select the best deal available when the time comes to get a loan.
Now, some of you are the analytical “I want to know how it works” type and some are the “I just want it to work” type. I do my best to appeal to both. I offer a streamlined process for those of you out there with busy schedules who want to deal with the loan origination process as little as possible. I’ll communicate directly with your realtor. I’ll drive papers out to you. I’ll call you when it’s convenient for you. And for those out there who are more analytical, I will arrange an appointment to answer every question you can conceive. If more questions come up, I am available 24 hours a day via phone or e-mail to answer them. The worst thing you’ll get is my voicemail, and I’ll call you back as soon as I am able.
So, you can randomly call a bunch of different bankers and try to do all of the legwork yourself whilst getting your credit pulled multiple times and subjecting yourself to a bunch of different sales pitches in the hopes that you aren’t being lied to and will end up with someone you can trust with your sensitive financial information…
...or...
You can just call me to get all of your questions answered and have me do all the heavy lifting for you.
All I ask is that you please don’t keep me a secret. Each of you knows someone who is thinking about buying a home or considering a refinance of their current mortgage loan. Please pass my info on to them or tell me about them (or both!). Your referrals represent 100% of my business and I can’t tell you how much I appreciate them. Thanks everyone! I hope to see all of you this Tuesday night at Carrabba’s in Altamonte Springs!
I want to devote this newsletter to clarifying what it is I do in real estate. It is my observation that some of you think I am a real estate agent, some think I’m an economic analyst, and a host of other things that aren’t quite accurate. So let me clear the air: I am a mortgage originator. It is my job to help people get loans to purchase a home or refinance one they already own. I do that by shopping multiple lenders on your behalf to find the one that has the lowest rate and the lowest closing costs.
But Greg, can’t I just go to my bank to get a loan? Yes, you certainly can. Unfortunately, the banker is limited to one bank with one set of loan products. So, depending on your situation, they may try to cram your file into a square-peg-round-hole type of situation because they simply lack the loan product that would work best for you. And, even if you have a squeaky clean financial background, I have premium lenders (available only through brokers) that offer premium pricing to top-notch files.
Also, keep in mind that interest rates change daily depending on global markets. On top of that, different banks can have the best rates on different days. Just as retail stores have different sales at different times, the bank with the “best rate” often changes. It is my job to keep track of all of that confusion for you and help you select the best deal available when the time comes to get a loan.
Now, some of you are the analytical “I want to know how it works” type and some are the “I just want it to work” type. I do my best to appeal to both. I offer a streamlined process for those of you out there with busy schedules who want to deal with the loan origination process as little as possible. I’ll communicate directly with your realtor. I’ll drive papers out to you. I’ll call you when it’s convenient for you. And for those out there who are more analytical, I will arrange an appointment to answer every question you can conceive. If more questions come up, I am available 24 hours a day via phone or e-mail to answer them. The worst thing you’ll get is my voicemail, and I’ll call you back as soon as I am able.
So, you can randomly call a bunch of different bankers and try to do all of the legwork yourself whilst getting your credit pulled multiple times and subjecting yourself to a bunch of different sales pitches in the hopes that you aren’t being lied to and will end up with someone you can trust with your sensitive financial information…
...or...
You can just call me to get all of your questions answered and have me do all the heavy lifting for you.
All I ask is that you please don’t keep me a secret. Each of you knows someone who is thinking about buying a home or considering a refinance of their current mortgage loan. Please pass my info on to them or tell me about them (or both!). Your referrals represent 100% of my business and I can’t tell you how much I appreciate them. Thanks everyone! I hope to see all of you this Tuesday night at Carrabba’s in Altamonte Springs!
Wednesday, February 17, 2010
Greece needs a gyro...get it? Because it sounds like "hero?" Goodness, I'm clever.
Happy Birthday to the $787,000,000,000.00 stimulus package! Wow, they grow up so fast. Yep, one year ago we slung a neighborhood-sized bag of money at the economy to stop our rapid descent into inevitable doom. Did it work? Well, no one will ever really know the answer to that question, as we didn’t get the chance to let the alternative play out. If I had to guess, I would say that if we hadn’t enacted the stimulus plan that a lot more jobs would have been lost and the debt crisis we were experiencing would still be in full swing. Obama evidently agrees with my assessment. I think it’s the big ears we both have. They’re like economic satellite dishes on either side of our heads.
Tee-hee. Self-deprecation.
Across the globe, Greece is having a fun time trying not to go bankrupt. It appears that Goldman Sachs (our good buddies from the very beginning of the debt crisis) assisted the Greek government in some “creative accounting procedures” that effectively masked the extent of their deficit. So, a la Bernie Madoff, when the money ran out, the game ended. It is yet unclear what the European Union is going to do in dealing with this new debt crisis, but it is a sobering event showing that the world economy still has some lumps to knead out.
Baking metaphor: check.
And, of course, we have a gigantic debate raging over the historically loose monetary policy that we are implementing (printing money like crazy). There are many out there that would have you believe that we are mortgaging our children’s lives away to the Chinese and we will soon be crippled by the one-two punch of unabated inflation and rising taxes.
Bad news first: they’re probably right to a certain extent. We are printing money like crazy. History has shown that such a habit never ends well. However, we are dealing with a “lesser of two evils” type of scenario. Back in the 30’s when we were mired in the Great Depression, the major mistake made was that government cut off stimulus measures too quickly and sent our country back-sliding into financial ruin. Ben Bernanke, our fearless Federal Reserve Chairman and resident Depression-scholar will not allow us to repeat that same mistake.
Does that mean we might make the opposite mistake of over-stimulating? Quite possibly. But the great hope is that our new ability to gather economic feedback in live-time (thank you technology) will allow us to be more nimble in our policy changes.
The good news here is that we can at least see this storm coming. Also, the silver lining is that inflation will increase the price of most assets uniformly, meaning home prices are going to start moving North once again. That’s good news for those who own homes and good incentive for those who are thinking about home-ownership.
Hint hint, people.
Tee-hee. Self-deprecation.
Across the globe, Greece is having a fun time trying not to go bankrupt. It appears that Goldman Sachs (our good buddies from the very beginning of the debt crisis) assisted the Greek government in some “creative accounting procedures” that effectively masked the extent of their deficit. So, a la Bernie Madoff, when the money ran out, the game ended. It is yet unclear what the European Union is going to do in dealing with this new debt crisis, but it is a sobering event showing that the world economy still has some lumps to knead out.
Baking metaphor: check.
And, of course, we have a gigantic debate raging over the historically loose monetary policy that we are implementing (printing money like crazy). There are many out there that would have you believe that we are mortgaging our children’s lives away to the Chinese and we will soon be crippled by the one-two punch of unabated inflation and rising taxes.
Bad news first: they’re probably right to a certain extent. We are printing money like crazy. History has shown that such a habit never ends well. However, we are dealing with a “lesser of two evils” type of scenario. Back in the 30’s when we were mired in the Great Depression, the major mistake made was that government cut off stimulus measures too quickly and sent our country back-sliding into financial ruin. Ben Bernanke, our fearless Federal Reserve Chairman and resident Depression-scholar will not allow us to repeat that same mistake.
Does that mean we might make the opposite mistake of over-stimulating? Quite possibly. But the great hope is that our new ability to gather economic feedback in live-time (thank you technology) will allow us to be more nimble in our policy changes.
The good news here is that we can at least see this storm coming. Also, the silver lining is that inflation will increase the price of most assets uniformly, meaning home prices are going to start moving North once again. That’s good news for those who own homes and good incentive for those who are thinking about home-ownership.
Hint hint, people.
Monday, February 1, 2010
In big Ben Bernanke we trust
Well, it’s been an interesting time in both politics and economics this past week. Where to begin…
Ben Bernanke was re-appointed for a second term as Chairman of the Federal Reserve. Four more years! As was widely expected, Big Ben was re-appointed just before the expiration of his term. The big surprise was the Republican support that he ended up getting in the final vote. It’s not that the GOP didn’t have their qualms with Mr. Bernanke, it’s just that no one could figure out a viable alternative to replace the guy. Honestly, the mere act of a changing anything would have spooked the markets on it’s own. So “if it ain’t broke, don’t fix it” wins again. In Ben we trust.
Advance 4th quarter Gross Domestic Product reported at 5.7%. Yyyyyyowza! For those of you just tuning in, that’s a big ol’ gain in production. But here’s what’s really up: business has realized that we’re not all riding the bullet-train to bankruptcy. You see, when everyone thought that we were entering a Book of Revelations-style cataclysm, they slashed production and started reducing inventory that they already had on hand. It’s best to clear the shelves if you might go out of business. Now that it doesn’t look like we’re all doomed, businesses are just starting to replenish their bare warehouse shelves. It’s going to be a while before big GDP gains translate to job growth, though.
Institute for Supply Management’s PMI registers 58.4%. Basically, any number above 50% here indicates an expanding economy from the perspective of suppliers and anything below 50% indicates a contraction. This is the 6th month in a row that we’ve been above that dividing line. No huge deal, but indicative of some distant, glimmering rays of hope for our weathered economy.
Obama gives his State of the Union address. I’m not going to try to cram all the things our Commander-in-Chief expounded into one paragraph. It was a good speech. If you haven’t seen it yet, you really should. YouTube search for “State of the Union”. Now we watch and see what action transpires from his strong words.
The long-awaited Obama Budget Plan was released. It adds a new jobs and wages tax credit amongst an aggressive business stimulus plan in order to curb unemployment. It anticipates higher tax revenues through increased taxes on certain population segments. It looks for above-average GDP growth over 2011-2015 which may or may not happen. It freezes investment in a lot of localized discretionary programs. It expands the deficit spending in an effort to focus on righting the economy before reigning in our growing mountain of debt. It, like every other thing in the world of politics, will be hotly debated for untold months to come. It is also going to throw a gigantic monkey wrench at getting anything accomplished on health care reform. Things were hard enough when we were trying to get both sides of Congress to agree on something BEFORE we threw a 3.834 Trillion (with a ‘T’) dollar budget at them to argue over.
There’s nothing like the smell of endless political gridlock in the morning. Mm hm.
Ben Bernanke was re-appointed for a second term as Chairman of the Federal Reserve. Four more years! As was widely expected, Big Ben was re-appointed just before the expiration of his term. The big surprise was the Republican support that he ended up getting in the final vote. It’s not that the GOP didn’t have their qualms with Mr. Bernanke, it’s just that no one could figure out a viable alternative to replace the guy. Honestly, the mere act of a changing anything would have spooked the markets on it’s own. So “if it ain’t broke, don’t fix it” wins again. In Ben we trust.
Advance 4th quarter Gross Domestic Product reported at 5.7%. Yyyyyyowza! For those of you just tuning in, that’s a big ol’ gain in production. But here’s what’s really up: business has realized that we’re not all riding the bullet-train to bankruptcy. You see, when everyone thought that we were entering a Book of Revelations-style cataclysm, they slashed production and started reducing inventory that they already had on hand. It’s best to clear the shelves if you might go out of business. Now that it doesn’t look like we’re all doomed, businesses are just starting to replenish their bare warehouse shelves. It’s going to be a while before big GDP gains translate to job growth, though.
Institute for Supply Management’s PMI registers 58.4%. Basically, any number above 50% here indicates an expanding economy from the perspective of suppliers and anything below 50% indicates a contraction. This is the 6th month in a row that we’ve been above that dividing line. No huge deal, but indicative of some distant, glimmering rays of hope for our weathered economy.
Obama gives his State of the Union address. I’m not going to try to cram all the things our Commander-in-Chief expounded into one paragraph. It was a good speech. If you haven’t seen it yet, you really should. YouTube search for “State of the Union”. Now we watch and see what action transpires from his strong words.
The long-awaited Obama Budget Plan was released. It adds a new jobs and wages tax credit amongst an aggressive business stimulus plan in order to curb unemployment. It anticipates higher tax revenues through increased taxes on certain population segments. It looks for above-average GDP growth over 2011-2015 which may or may not happen. It freezes investment in a lot of localized discretionary programs. It expands the deficit spending in an effort to focus on righting the economy before reigning in our growing mountain of debt. It, like every other thing in the world of politics, will be hotly debated for untold months to come. It is also going to throw a gigantic monkey wrench at getting anything accomplished on health care reform. Things were hard enough when we were trying to get both sides of Congress to agree on something BEFORE we threw a 3.834 Trillion (with a ‘T’) dollar budget at them to argue over.
There’s nothing like the smell of endless political gridlock in the morning. Mm hm.
Thursday, January 21, 2010
Tightening the thumbscrews, one turn at a time
Anyone remember that crazy time toward the end of 2008 when all of our portfolios fell apart? Through a clever combination of whiskey and denial, most of us have managed to effectively neutralize any memory of the actual happenings of the crash. All we know is that we landed somewhere unpleasant and the banks are somehow completely to blame.
Well, if you’ll recall, one of the big events that happened back then was that Fed Chairman Ben Bernanke swooped in on his mighty steed and said, “Hey AIG: in order to ease your burden here, I’ll make the taxpayers buy all your faulty and most likely worthless assets so you can go back to frolicking around the globe insuring whatever it is you people insure.”
And at AIG there was much rejoicing. Yaaaaaaaay.
However, on Main Street (a clever way of saying EVERYWHERE else other than Wall Street), there was not much rejoicing. It’s like we just paid top dollar for steaming piles of… use your imagination.
Back in the day, this kind of thing would have been dealt with by throwing Big Ben into the river. If he floated, than he was a witch and should be burned at the stake. And if he sank, well, then we probably shouldn’t have drowned him. Oops.
“How could our mighty leader lead us into such a poor deal?” we asked. Well, turns out that we’re most likely going to profit from that deal. Yeah. The asset values came back. Huh. Didn’t see that coming. I mention this story now because Obama just got done expounding the proposed rules that were going to be applied to banks that are deemed ’too big to fail’ in order to reduce their risk-taking.
Do I think it’s a good idea or a bad idea? I dunno. But neither do you OR the talking heads on our favorite news networks. It’s history being made. Are we going to swing from a period of gross under-regulation to a time of potential over-regulation? Probably. History would tell us that these patterns tend to repeat themselves. But regardless, the powers that be are doing what they feel is best for their constituency. We’ll just have to watch and see where the chips fall.
In mortgage news, the Federal Housing Administration (FHA) just had a press release itemizing some proposed changes to their lending practices. The big three to watch out for:
1) Stricter credit requirements
2) The maximum allowable seller contribution towards closing costs will be reduced from 6% to 3%
3) The Upfront Mortgage Insurance Premium (UFMIP) cost will go up from 1.75% to 2.25%
So as not to belabor the point, UFMIP is essentially a closing cost required on all FHA loans that can be financed in. Bottom line: the loan is getting more expensive. The credit tightening and reduction in seller contribution is because the banks do not want to expose themselves to writing any more bad loans. This means that a prospective buyer will have to have higher credit scores and will have to come up with more money at closing to buy a home.
Consider yourselves warned. Right now we are experiencing the time we’ll soon refer to as the ‘Good Ol’ Days’. Enjoy them while they last.
Well, if you’ll recall, one of the big events that happened back then was that Fed Chairman Ben Bernanke swooped in on his mighty steed and said, “Hey AIG: in order to ease your burden here, I’ll make the taxpayers buy all your faulty and most likely worthless assets so you can go back to frolicking around the globe insuring whatever it is you people insure.”
And at AIG there was much rejoicing. Yaaaaaaaay.
However, on Main Street (a clever way of saying EVERYWHERE else other than Wall Street), there was not much rejoicing. It’s like we just paid top dollar for steaming piles of… use your imagination.
Back in the day, this kind of thing would have been dealt with by throwing Big Ben into the river. If he floated, than he was a witch and should be burned at the stake. And if he sank, well, then we probably shouldn’t have drowned him. Oops.
“How could our mighty leader lead us into such a poor deal?” we asked. Well, turns out that we’re most likely going to profit from that deal. Yeah. The asset values came back. Huh. Didn’t see that coming. I mention this story now because Obama just got done expounding the proposed rules that were going to be applied to banks that are deemed ’too big to fail’ in order to reduce their risk-taking.
Do I think it’s a good idea or a bad idea? I dunno. But neither do you OR the talking heads on our favorite news networks. It’s history being made. Are we going to swing from a period of gross under-regulation to a time of potential over-regulation? Probably. History would tell us that these patterns tend to repeat themselves. But regardless, the powers that be are doing what they feel is best for their constituency. We’ll just have to watch and see where the chips fall.
In mortgage news, the Federal Housing Administration (FHA) just had a press release itemizing some proposed changes to their lending practices. The big three to watch out for:
1) Stricter credit requirements
2) The maximum allowable seller contribution towards closing costs will be reduced from 6% to 3%
3) The Upfront Mortgage Insurance Premium (UFMIP) cost will go up from 1.75% to 2.25%
So as not to belabor the point, UFMIP is essentially a closing cost required on all FHA loans that can be financed in. Bottom line: the loan is getting more expensive. The credit tightening and reduction in seller contribution is because the banks do not want to expose themselves to writing any more bad loans. This means that a prospective buyer will have to have higher credit scores and will have to come up with more money at closing to buy a home.
Consider yourselves warned. Right now we are experiencing the time we’ll soon refer to as the ‘Good Ol’ Days’. Enjoy them while they last.
Friday, January 8, 2010
Marching through molasses
Optimism abounded this week as everyone held their breath and waited for Friday’s jobs report numbers to come out. The universal hope was that we would see job growth in December of 2009, which would be the 1st growth we’ve experienced in 2 years.
Did we? Could we? Hope and change?
Nah. 85,000 more jobs fell off a cliff Wile E. Coyote-style. Unemployment held steady at 10%. The funny part was that November’s job numbers were revised, showing a gain of 4,000 jobs. So...yay! We finally had a month-over-month jobs increase...barely.
Alright, alright, to put things in perspective, 1st quarter 2009 we lost an average of 691,000 jobs per month. So, there is something huge to be said about things being “not as bad”.
It’s rough running this ship right now, guys and gals. This isn’t a normal, natural business cycle we’re experiencing. It is a complete restructuring of our economic base, incited by a period of wild excess and shadowy business practices. Lots of variables and moving targets are out there. Our country had become an easy money junkie, and withdrawal from that false system of profit-churning is going to be painful. And it’s going to last a while. My hat is off to our leadership for doing their best in battling their way through this mess.
Why do I care about job growth? Home purchasing demand. If John Doe has no job, John isn’t going to buy a house or, worse yet, will stop paying on the house he already has. If John doesn’t buy a house or loses the one he’s in, demand is reduced and home prices will decrease as a result. And that is no good for everyone.
There’s a ton of you out there that want to become homeowners or know people who want to become homeowners, but for some reason or another they think that they can’t. News flash: many of them are dead-on correct. Lending guidelines are tough and job insecurity abounds. A lot of would-be homeowners have their feet firmly cemented in their own private iteration of our economic quagmire. But being unqualifiable for a mortgage can be nothing more than a temporary phenomenon if you choose for it to be.
If you have a job right now: great. But the old-fashioned punch-in, punch-out, repeat-until-a-happy-and-comfortable-retirement method doesn’t work on its own. In addition to a lucrative career, you need to properly manage your assets and your debt. Whether you have the goal of buying a place or simply need an extra set of eyes on your financial life to provide some pragmatic guidance, I’m here to help. The advice is free to my friends and affiliates, and sometimes a little guidance can make a huge difference in your family’s financial trajectory. Wherever you’re at, it only makes sense to start moving one step at a time towards where you want to be. And I want to be your hiking buddy throughout the climb.
Did we? Could we? Hope and change?
Nah. 85,000 more jobs fell off a cliff Wile E. Coyote-style. Unemployment held steady at 10%. The funny part was that November’s job numbers were revised, showing a gain of 4,000 jobs. So...yay! We finally had a month-over-month jobs increase...barely.
Alright, alright, to put things in perspective, 1st quarter 2009 we lost an average of 691,000 jobs per month. So, there is something huge to be said about things being “not as bad”.
It’s rough running this ship right now, guys and gals. This isn’t a normal, natural business cycle we’re experiencing. It is a complete restructuring of our economic base, incited by a period of wild excess and shadowy business practices. Lots of variables and moving targets are out there. Our country had become an easy money junkie, and withdrawal from that false system of profit-churning is going to be painful. And it’s going to last a while. My hat is off to our leadership for doing their best in battling their way through this mess.
Why do I care about job growth? Home purchasing demand. If John Doe has no job, John isn’t going to buy a house or, worse yet, will stop paying on the house he already has. If John doesn’t buy a house or loses the one he’s in, demand is reduced and home prices will decrease as a result. And that is no good for everyone.
There’s a ton of you out there that want to become homeowners or know people who want to become homeowners, but for some reason or another they think that they can’t. News flash: many of them are dead-on correct. Lending guidelines are tough and job insecurity abounds. A lot of would-be homeowners have their feet firmly cemented in their own private iteration of our economic quagmire. But being unqualifiable for a mortgage can be nothing more than a temporary phenomenon if you choose for it to be.
If you have a job right now: great. But the old-fashioned punch-in, punch-out, repeat-until-a-happy-and-comfortable-retirement method doesn’t work on its own. In addition to a lucrative career, you need to properly manage your assets and your debt. Whether you have the goal of buying a place or simply need an extra set of eyes on your financial life to provide some pragmatic guidance, I’m here to help. The advice is free to my friends and affiliates, and sometimes a little guidance can make a huge difference in your family’s financial trajectory. Wherever you’re at, it only makes sense to start moving one step at a time towards where you want to be. And I want to be your hiking buddy throughout the climb.
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