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	<title>pligg - published -the economy-</title>
	<link>http://www.housebubble.org</link>
	<description>Pligg Web 2.0 Content Management System</description>
	<pubDate>Tue, 13 Mar 2007 12:25:58 MDT</pubDate>
	<language>en</language>
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		<title><![CDATA[Late Mortgage Payments Reach New High!]]></title>
		<link>http://www.housebubble.org/story.php?title=Late-Mortgage-Payments-Reach-New-High</link>
		<comments>http://www.housebubble.org/story.php?title=Late-Mortgage-Payments-Reach-New-High</comments>
		<pubDate>Tue, 13 Mar 2007 12:25:58 MDT</pubDate>
		<dc:creator>Asder</dc:creator>
		<category>the economy</category>
		<guid>http://www.housebubble.org/story.php?title=Late-Mortgage-Payments-Reach-New-High</guid>
		<description><![CDATA[The Associated Press reports that &amp;quot;Late Mortgage Payments Jump to 3 1/2 Year High, New Foreclosures Hit All-Time HighWASHINGTON (AP) -- Late mortgage payments shot up to a 3 1/2-year high in the final quarter of last year and new foreclosures surged to a record high as borrowers with tarnished credit histories had trouble keeping up with their monthly payments....Concerns about risky mortgages are making investors jittery. Those fears also contributed to a worldwide stock meltdown on Feb. 27, where the Dow Jones industrials suffered a 416-point plunge.Worried about defaults on high-risk mortgages, federal bank regulators earlier this month called on lenders to use caution in making subprime loans and strictly evaluate borrowers' ability to repay them.New Century Financial Corp., which was the nation's second-largest subprime mortgage maker, is scrambling to stay afloat after all its bank lenders cut off funding or informed the company of their intent to do so because of its failure to make payments. The Irvine, Calif.-based company already has stopped accepting all new loan applications.&amp;quot; &nbsp;&#187;&nbsp;<a href='http://biz.yahoo.com/ap/070313/late_mortgages.html?.v=8'>original news</a>]]></description>
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		<title><![CDATA[Stocks of Subprime Lenders "Melt Down"]]></title>
		<link>http://www.housebubble.org/story.php?title=Stocks-Subprime-Lenders-Melt-Down</link>
		<comments>http://www.housebubble.org/story.php?title=Stocks-Subprime-Lenders-Melt-Down</comments>
		<pubDate>Tue, 06 Mar 2007 07:58:22 MST</pubDate>
		<dc:creator>chippy</dc:creator>
		<category>the economy</category>
		<guid>http://www.housebubble.org/story.php?title=Stocks-Subprime-Lenders-Melt-Down</guid>
		<description><![CDATA[The St. Petersburg Times reports that more subprime lenders are seeing their chickens come home to roost: &amp;quot;As the stocks of subprime mortgage lenders melted down Monday on Wall Street, one struggling bank put several hundred of its Tampa employees on ice.Fremont Investment &amp;amp; Loan, the country's eighth-biggest subprime lender, told most of its Tampa staff to stay home Monday on paid leave. The move followed news that Fremont General Corp., its California-based parent company, had decided to quit lending money to home buyers who have bad credit and to try to sell that business line. Tampa staff were told to expect an update on their status Wednesday. Their future will depend in part on whether the residential mortgage business is sold, and to whom.&amp;quot;As far as how individual offices will be affected by this, it's really too early to say,&amp;quot; said Dan Hilley, a company spokesman.Fremont's stock, which began the year at $16.21 per share, dropped 32 percent Monday to close at $5.89. It had plenty of company. New Century Financial Corp., ranked No. 2 on National Mortgage News' list of the largest subprime mortgage lenders, saw its stock fall 69 percent to $4.56 amid fears it might file for bankruptcy protection. Higher-than-expected default rates are causing most of the hand-wringing.Other subprime lenders - those who cater to borrowers with below-average credit - with significant bay area operations include third-ranked Countrywide Financial Corp., for which Tampa is one of four regional hubs, and New Century. Local economic development officials helped attract thousands of financial-service jobs in recent years while the industry enjoyed a growth spurt.Because it markets its loans to mortgage brokers rather than directly to consumers, Fremont is less well-known than some of its competitors. But the company issued $3.9-billion worth of residential loans to Florida homebuyers in 2005, more than any other state but California and New York.&amp;quot; &nbsp;&#187;&nbsp;<a href='http://www.sptimes.com/2007/03/06/Business/Subprime_lender_halts.shtml'>original news</a>]]></description>
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		<title><![CDATA[Subprime Loans Lead Goldman and Merril to Junk Status]]></title>
		<link>http://www.housebubble.org/story.php?title=Subprime-Loans-Lead-Goldman-Merril-to-Junk-Status</link>
		<comments>http://www.housebubble.org/story.php?title=Subprime-Loans-Lead-Goldman-Merril-to-Junk-Status</comments>
		<pubDate>Fri, 02 Mar 2007 15:58:26 MST</pubDate>
		<dc:creator>chippy</dc:creator>
		<category>the economy</category>
		<guid>http://www.housebubble.org/story.php?title=Subprime-Loans-Lead-Goldman-Merril-to-Junk-Status</guid>
		<description><![CDATA[Bloomberg has this interesting piece on the massive exposure of major banks to the subprime loans.  It seems after years of windfall profits, their chickens may be coming home to roost: &amp;quot;Goldman Sachs Group Inc., Merrill Lynch &amp;amp; Co. and Morgan Stanley, which earned a record $24.5 billion in 2006, suddenly have become so speculative that their own traders are valuing the three biggest securities firms as barely more creditworthy than junk bonds.Prices for credit-default swaps linked to the bonds of the New York investment banks this week traded at levels that equate to debt ratings of Baa2, according to Moody's Investors Service. For Goldman, Morgan Stanley and Merrill that's five levels below the actual Aa3 rating on their senior unsecured notes and two steps above non-investment grade, or junk.Traders of credit derivatives are more alarmed than stock and bond investors that a slowdown in housing and the global equity market rout have hurt the firms. Merrill since 2005 has financed two mortgage lenders that subsequently failed and bought a third, First Franklin Financial Corp., for $1.3 billion.``These guys have made a lot of money securitizing mortgages over the years in a mortgage boom time,'' said Richard Hofmann, an analyst at bond research firm CreditSights Inc. in New York. ``The question now is what is the exposure to credit risk and what are the potential revenue headwinds if they're not able to keep that securitization machine humming along.''Credit-default swaps on the debt of Goldman, the world's biggest securities firm, have risen to $32,775 per $10 million in bonds, up from $21,500 at the start of the year, according to prices compiled by London-based CMA Datavision. The price touched $35,000 on Feb. 28, the highest since June 2005.Spokesmen and spokeswomen for Goldman, Lehman, Merrill and Morgan Stanley declined to comment. A spokeswoman for Bear Stearns didn't immediately return calls for comment. ... At least 20 lenders have shut down, scaled back or been sold this year. Countrywide Financial Corp., the biggest U.S. mortgage lender, yesterday said borrowers were at least 30 days past due at the end of last year on almost a fifth of the subprime loans that it serviced for others.``There's been a little bit of a reappraisal of the financial sector, with a strong desire to get away from subprime exposure,'' said Scott MacDonald, director of research at Aladdin Capital Management LLC in Stamford, Connecticut, which manages $16.5 billion in assets.Merrill equity analysts two days ago cut their recommendations on Goldman, Lehman and Bear Stearns shares as well as that of European banks Deutsche Bank and Credit Suisse Group to ``neutral'' from ``buy'' because they said earnings will probably decline next month as investors become wary.Bear Stearns's stake in non-investment grade retained mortgage securities, or what its keeps from packaging loans into bonds, represents about 13 percent of the firm's ``tangible'' equity, according to CreditSights.For Lehman, it's 11 percent. Goldman, Morgan Stanley and Merrill don't disclose how much of their total retained securities are rated below investment grade, or junk. Overall, their exposure is in ``the low- to mid-teens,'' CreditSights said. &amp;quot; &nbsp;&#187;&nbsp;<a href='http://www.bloomberg.com/apps/news?pid=20601087&amp;sid=azrxhCZbHMLk&amp;refer=home'>original news</a>]]></description>
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		<title><![CDATA[The Mother of All Bubbles]]></title>
		<link>http://www.housebubble.org/story.php?title=Mother-All-Bubbles-1</link>
		<comments>http://www.housebubble.org/story.php?title=Mother-All-Bubbles-1</comments>
		<pubDate>Wed, 31 Jan 2007 11:23:48 MST</pubDate>
		<dc:creator>Asder</dc:creator>
		<category>the economy</category>
		<guid>http://www.housebubble.org/story.php?title=Mother-All-Bubbles-1</guid>
		<description><![CDATA[The Atlantic Free Press has an excellent (and long) read on the macro-picture of the current bubble: &amp;quot;The hoopla over the &amp;quot;rise in new homes sales&amp;quot; ignores the &amp;quot;real&amp;quot;story which appears in many of the same articles; that is, &amp;quot;In 2006 existing home sales declined by 8.4%, the biggest drop in 17 years, and new homes sales fell by a whopping 17.3%, the largest in 16 years&amp;quot;. This is the real scoop although it is predictably hidden in the fine print. It signals the beginning of a long, downward spiral which will increase unemployment, shrink GDP, and send millions of homeowners into foreclosure and out onto the streets....Some of Wall Street's heavy-hitters know that trouble is brewing and are finally putting out the red flags. 2 weeks ago Goldman Sachs indicated that &amp;quot;the US Federal Reserve will need to slash rates 3 times this year as the housing slump goes from bad to worse and the American consumer begins to buckle&amp;quot;. (Ambrose Evans-Pritchard &amp;quot;US Housing Bust getting worse&amp;quot;)&amp;quot;We believe that housing will soon become the a€˜straw that breaks the camels back', said David Kostin, the investment bank's strategist. Goldman Sachs said homeowners had treated windfall gains from rising house prices as if they were a€˜recurring income' using home equity withdrawals to subsidize over-stretched lifestyles. This artificial boost to spending has already dropped from 7% to 4% of GDP over the last year, and is likely to halve again in 2007. Mortgage equity withdrawal will fall from 13% of a€˜discretionary household cash flow' in 2006 to 7% this year, causing spending power to contract for the first time since the dotcom bust&amp;quot;.Clearly, the wiz-kids at G-Sachs are not taken in by the 4.8% jump in new homes sales in December. They see the dark clouds forming on the horizon and are anticipating the approaching recession.The mainstream media are starting to be more forthright, too. CNN Money reported last week:&amp;quot;Americans continue having difficulties paying their mortgage obligations, with December foreclosure rates above the 100,000 mark for the 5th straight month. The number of homeowners entering some stage of foreclosure process in December was 109,000 a€¦up 35% from December 2005 according to Realty Trac&amp;quot;. It sounds grim, but the worst is yet to come.Jim Willie at the goldenjackass.com provided this bleak look at the current housing market:&amp;quot;Beazer Homes stuck a hot poker in the heart of the dimwitted optimists who believe the housing market has stabilized. Their spokesman said, a€˜We have yet to see any meaningful evidence of a sustained recovery in the housing market'. To back that statement up, they reported new orders were down 55% from a year ago, and their cancellations are running at a horrendous 43% rate. People might sign contracts based on hearing the media news, and cancel those same contracts on a contrast with reality checks. The Dec. existing homes sales came in at minus0.8%, the largest decline in 24 years dating back to 1982. The official data contained a contraction which went overlooked on the shallow voices on CNBC. The data claims that inventory levels fell by 7.9% at the same time that sales fell in a big way. Well, perhaps the inventory levels do not factor in the cancellations. (They do not) Bear in mind that 3 large homebuilders in recent weeks announced a collective $1.2 billion in land option losses. The pain has not nearly ended for housing.&amp;quot;The signs of a major economic downturn are everywhere for those who chose to look beyond the cheery predictions in the real estate section of the news.Next year, an estimated $1 trillion of ARMs (Adjustable Rate Mortgages) are due to &amp;quot;reset&amp;quot; which will cause stiff increases in monthly mortgage payments. We're bound to see a steady rise in defaults as well as a boost in new claims for personal bankruptcy.This downward cycle is just beginning. In 2006, a mere $300 billion in ARMs reset pushing overleveraged homeowners to the brink of insolvency. Imagine what will happen in 2007 when $1 trillion of these explosive loans comes due. And, of course, as more people are unable to hang on and their homes go into foreclosure; inventory will continue to skyrocket. Peter Schiff of europac.net summarized the situation this way:&amp;quot;The recent jump in bond rates suggests that things are about to get much worse for the housing market. Since January 5th interest rates have risen by over 30 basis points and gold has risen over $40 per ouncea€¦My guess is that rather than a bottom of the housing market, bond investors around the world are beginning to appreciate the inflationary implications of a real estate crisis. &amp;quot;..... full story at:http://www.atlatnticfreepress.com/content/view/848/81 &nbsp;&#187;&nbsp;<a href='http://www.atlanticfreepress.com/content/view/848/81/'>original news</a>]]></description>
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		<title><![CDATA[Another Interest Rate Hike?]]></title>
		<link>http://www.housebubble.org/story.php?title=Another-Interest-Rate-Hike</link>
		<comments>http://www.housebubble.org/story.php?title=Another-Interest-Rate-Hike</comments>
		<pubDate>Mon, 29 Jan 2007 11:05:37 MST</pubDate>
		<dc:creator>Asder</dc:creator>
		<category>the economy</category>
		<guid>http://www.housebubble.org/story.php?title=Another-Interest-Rate-Hike</guid>
		<description><![CDATA[The Federal Reserve thinks the economy is doing just fine, and is considering another rate increase according to CBS News:&amp;quot;The Federal Reserve is meeting again this week, and fed watchers are not expecting another rate cut. In fact, some say a rate hike would not be a surprise. One of those who are thinking along those lines is Ray Hennessey, editor of SmartMoney.com.The Federal Reserve is currently faced with an economy that hasn't slowed down, which may force them to raise interest rates. That comes into play if you're trying to buy or sell your home. Hennessey believes the Federal Reserve has misread the housing market. &amp;quot;They've overestimated the impact of the housing slow-down,&amp;quot; says Hennessey. &amp;quot;It wasn't this bubble bursting... And it hasn't been catastrophic.&amp;quot; Because the change wasn't as dramatic as the Federal Reserve assumed it would be, the economy is still doing well.Another reason for a possible rate hike? Employment is still very tight, according to Hennessey. &amp;quot;What you want for a slowing economy is a higher unemployment. We still have... Near full employment,&amp;quot; he says. It works out well for those of us who are part of the work force, but it can be a hindrance for the Federal Reserve if they're trying to keep the economy in check.A rate increase would affect investors as well. &amp;quot;You want to be able to borrow money at a cheap rate so you can then reinvest in your business,&amp;quot; says Hennessey. &amp;quot;Markets like a lower interest rate environment.&amp;quot;Higher inflation is also a worry. According to Hennessey, &amp;quot;Prices are still going up even as energy costs have come down.&amp;quot; In Hennessey's opinion, the Federal Reserve has misread inflation rates the most.&amp;quot; &nbsp;&#187;&nbsp;<a href='http://www.cbsnews.com/stories/2007/01/29/hennessey/main2406212.shtml'>original news</a>]]></description>
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		<title><![CDATA[Could the Foreclosure Rate hit 80%?  (!)]]></title>
		<link>http://www.housebubble.org/story.php?title=Could-Foreclosure-Rate-hit-80-</link>
		<comments>http://www.housebubble.org/story.php?title=Could-Foreclosure-Rate-hit-80-</comments>
		<pubDate>Tue, 23 Jan 2007 09:07:12 MST</pubDate>
		<dc:creator>chippy</dc:creator>
		<category>the economy</category>
		<guid>http://www.housebubble.org/story.php?title=Could-Foreclosure-Rate-hit-80-</guid>
		<description><![CDATA[Mike Whitney writes in the Dissident Voice: &amp;quot; The American people appear to be oblivious to the economic hurricane that is expected to touchdown in late 2007. That's when $1 trillion in ARMs (Adjustable Rate Mortgages) will &amp;quot;reset&amp;quot; triggering a massive increase in foreclosures and plunging the country into a deep recession. If energy costs continue to rise at the same time or if the dollar loses more ground, we may be rooting around in the backyard garden plot looking for passed-over spuds and radishes. The crisis is entirely the work of former Fed Chairman Alan Greenspan, whose &amp;quot;cheap money&amp;quot; policy caused a speculative frenzy in the real estate market that sent home prices through the stratosphere. In fact, the bubble originated in 2001 when Greenspan lowered interest rates to a meager 1% and ignited a refinancing boom as well as a sudden up-tick in home sales. Now, after 17 straight interest rate increases, the bubble is quickly losing steam and the effects are being felt from sea to shining sea. Rest assured, the sudden downturn in the housing market is just the first gust from an impending tornado. By the end of 2007, America's matchstick economy will look like the rubble strewn landscape of New Orleans 9th Ward. Greenspan has been the biggest player in this pre-Depression operetta. He kept the printing presses whirring along at full-tilt while the banks and mortgage lenders devised every scam imaginable to put greenbacks into the hands of unqualified borrowers. ARMs, &amp;quot;interest-only&amp;quot; or &amp;quot;no down payment&amp;quot; loans etc. were all part of the creative financing boondoggle which the kept the economy sputtering along after the &amp;quot;dot.com&amp;quot; crackup in 2000.  It worked like a charm too. Aided by the Fed's cheap money policy, the housing market sizzled. In just six years the total value of real estate jumped from $11 trillion to $21 trillion! (&amp;quot;From 2001 through 2005, outstanding mortgage debt rose 68% from $5293 billion to $8888 billion&amp;quot;) It's the biggest expansion of debt in history and it was all engineered by seductively low interest rates. Greenspan executed the swindle with the adroitness of a carnival huckster, luring millions of buyers to the real estate gold rush. Now, many of those same buyers are stuck with enormous loans that are about to reset at drastically higher rates while their homes have already depreciated 10% to 20% in value. This phenomenon of being shackled to a &amp;quot;negative equity mortgage&amp;quot; is what economist Michael Hudson calls the &amp;quot;New Road to Serfdom&amp;quot;: paying off a mortgage that is significantly larger than the current value of the house. The sheer magnitude of the problem is staggering.  For example, an article in the New York Times last week noted that, &amp;quot;1 in 5 sub-prime loans will end in foreclosure. . . . About 2.2 million borrowers who took out sub-prime loans from 1998 to 2006 are likely to lose their homes.&amp;quot; In real terms, that translates into roughly 10 million people! Greenspan, of course, nodded approvingly while the new regime of shaky lending practices was being put into place. What really mattered to the Fed chief was making sure the economy could be kept on life support while the massive &amp;quot;unfunded&amp;quot; tax cuts were provided for his well-healed buddies in corporate America and while the country charged off to war in Iraq. Greenspan knew that his &amp;quot;low interest rate bonanza&amp;quot; was driving the wooden stake into America's heart. In fact, every banker understands the effects of interest rates; it's fundamental to their trade. Lower the interest rates and the people will swarm to the banks like piranhas to a hambone. It never fails. The housing bubble has nothing to do with &amp;quot;market forces&amp;quot; or (Gawd help us) supply-and-demand. That's all gibberish. Low interest rates provide a channel for pumping cheap money into the economy, which inevitably creates equity bubbles. When Greenspan lowered rates to 1%, he knew that he was simply trading a technology bubble for a real estate bubble. Now, of course, he has retired before the wheels fall off the cart so he can avoid being blamed for the coming catastrophe.  The fallout from the housing explosion will be much more destructive than what most people imagine. In fact, Peter Schiff, president of Euro Pacific Capital Inc., believes that the NY Times' estimates are too optimistic. Schiff anticipates that failures in the sub-prime loan market will put greater downward pressure on housing by increasing inventory and lowering prices. Schiff says: &amp;quot;The secondary effects of the &amp;quot;1 out of 5&amp;quot; sub-prime default rate will be a chain reaction of rising interest rates and falling home prices engendering still more defaults, with the added foreclosures causing the cycle to repeat. In my opinion, when the cycle is fully played out we are more likely to see an 80% default rate rather than 20%.&amp;quot; 80%?! 40 million Americans headed towards foreclosure? Better pick out a comfy spot in the local park to set up the lean-to. &amp;quot; &nbsp;&#187;&nbsp;<a href='http://www.dissidentvoice.org/Jan07/Whitney09.htm'>original news</a>]]></description>
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