The BULL everyone hates
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The scariest thing of the asset bubble’ being created by the weak dollar will be that we ( our mkt and our economy will be Japan ) How would liked to have been a broker in Japan for the last 15 years. Slow painful touture
The interlocking nature of Japanese stock ownership, with financial institutions owning large chunks of other companies, had once seemed to be an ingredient of the nation’s economic success, one that contributed to the Nikkei’s 1980s rise. Increasingly, it now came to be seen as a problem, with banks’ stability tied to a volatile equity market.
As Japan moved in and out of recession throughout the 1990s, Japanese stocks put in a lackluster performance, notably contrasting with the bull market taking shape in the U.S. and various other countries. The Nikkei fell below 13,000 in 1998 before rallying to almost 19,000 at end-1999. These gains mostly slipped away in 2000, however, and as equities fell worldwide following the September 11, 2001 terrorist attacks, the Nikkei went lower than 10,000 for the first time since 1984.
On November 14, 2002, the Nikkei sank below the Dow Jones Industrial Average, closing at 8,303 compared to the Dow’s 8,542. This crossing of paths would not last long, but prior to Japan’s lost decade, it would have been difficult to imagine such a thing happening at all. On the last trading day of the 1980s, when the Dow closed at 2,753, the American benchmark had been about one-fourteenth of the high-flying Nikkei.
The rebound that began in 2003 brought the Nikkei from a low of 7,607 on April 30 of that year to 18,261 on July 9, 2007. But a steady descent brought the index into the 13,000 range by mid-2008 and the decline became precipitous as equities around the world deflated last September. With the Nikkei lately still mired in four digits, Japan’s economic debacle is ongoing, and the lost decade now threatens to stretch into a pair of lost decades.
[quote=Jebediah][quote=howboutshoeshine]
What if there is an 80% chance a hurricane will strike between July 1st and July 14th?
70%?
60%?
50%?
Better to be safe than sorry?[/quote] I dispute the % chance of something happening. What was the % chance of the market rising 50% in the following 6 months on March 9, 2009? The market and therefore it's price is based simply on the acceptance or aversion to risk. The P/E ratio on the market is lower now than on 3/31/2009. What does that say? I'm not telling you that you are wrong, I am saying that you have no way of knowing. [/quote] For me, and many others that follow trends the probability was VERY high. 3% bullish, biggest CRASH in history, risk aversion at the highest levels in history. ( I use treasuries to measure willingness to take risk because it is the "safest" asset class ) We are in the opposite position now. ( same as 2007 ) I here ya though, prediction is always based on probability and because of that I may be COMPLETELY wrong. You have a strong point, just the same.There is also a ton of companies that buy goods from overseas. I sure can’t see advantage as an individual have my currency decline in value on a daily bases. consumer 2/3 of gdp. On a side note about our problems …the banks are now treating forclosures as if they were OPEC. they open up and let a few out each month as they are still holding a ton of them on the books. which after all was the root of the problem in the first place
YOU GUYS DO KNOW THAT DOWNDOWNDOWN IS THE GUY PRETENDING TO BE THE REAL MELETIO, DON’T YOU?
LET IT RAIN!!! WATCH THE MARKET FALL. DOLLAR IS WEAK. WE’RE GOING TO END UP JUST LIKE JAPAN.
[quote=meletoi] YOU GUYS DO KNOW THAT DOWNDOWNDOWN IS THE GUY PRETENDING TO BE THE REAL MELETIO, DON’T YOU?LET IT RAIN!!! WATCH THE MARKET FALL. DOLLAR IS WEAK. WE’RE GOING TO END UP JUST LIKE JAPAN.
[/quote]
?
First off, you have no idea what you are talking about with Banks and Foreclosures. Banks have no desire to keep a non-performing assets on their books any longer than they have to. The reason being is that it directly affects their capital structure to have non-performing assets and that structure is what allows banks to lever their money by creating loans. The entire non-performing asset problem is what lead to the 'zombie bank' phenomenon. They have capitalization requirements to remain solvent. Secondly, you can't see an advantage to the lower dollar? Lets see, rising interest rates means that as a highly leveraged consumer you will be squeezed (bad) but as an investor or dealing in an industry that is involved with investing (see title of website you are on) higher rates mean better returns for investors (new issues of bonds will be at a higher rate, money market accounts and CD's won't be a joke for investors anymore). Higher rates typically coincide with higher inflation. Inflation is NOT A BAD thing in moderation. Inflation is what keeps the economy from dying. Demand spurs corporate profits and also revenues, which in turn spurs earnings and thus higher stock prices. The reason Inflation is not a bad thing in moderation is it spurs demand. Example: If you were going to buy a house, but knew that the price would drop 5% by year end, you do not buy it. No one purposefully buys an asset to have it decline. If you knew that it was going to go up 5% soon, you would rush to buy it today. No one wants to pay more than they have to for an asset either. Without inflation (in moderation) you have low or no demand for goods. The housing bubble is an example of how inflation spurred demand. It is also an example of how it was no longer in moderation and thus caused a problem. The result of deflation on homes has also been a great example of how deflation cripples demand and how it should be avoided at all costs.There is also a ton of companies that buy goods from overseas. I sure can’t see advantage as an individual have my currency decline in value on a daily bases. consumer 2/3 of gdp. On a side note about our problems …the banks are now treating foreclosures as if they were OPEC. they open up and let a few out each month as they are still holding a ton of them on the books. which after all was the root of the problem in the first place
Get your fact correct before you tell someone they have no idea what they’re are talking about.
Banks aren’t reselling many foreclosed homes
Carolyn Said, Chronicle Staff Writer
A vast “shadow inventory” of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”
I worked at a bank for going on a decade, so take it from me, I do have my facts straight. Because some reporter quotes some stats does not A) make it a fact or B) show the context of the numbers. The fact remains that NO BANK wants to own non-performing asset. Try looking up sometime what the Bank Holding Company Act of 1956 sometime for some of the requirements that Banks have for solvency before you post some reporter to support your argument. Do banks own non-performing assets? Sure. Are they actively seeking the best possible way to get rid of them? Absolutely. Are they doing some OPEC type rationing? Absolutely NOT. Again, you sir, have no idea how much you don't know about this subject.Get your fact correct before you tell someone they have no idea what they’re are talking about.
Banks aren’t reselling many foreclosed homes
Carolyn Said, Chronicle Staff Writer
A vast “shadow inventory” of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”
[quote=downdowndown]Get your fact correct before you tell someone they have no idea what they’re are talking about.
Banks aren’t reselling many foreclosed homes
Carolyn Said, Chronicle Staff Writer
A vast “shadow inventory” of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”
[/quote]
WHAT DID I TELL YOU?
LET IT RAIN!!!
wrong again.
Banks Purposely Holding Off the Market a Vast Inventory of Foreclosed Homes
By editor|Apr 8, 2009, 12:56 PM|Author’s Website
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data source.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures.
“There is a real danger that there is much more (foreclosure) inventory than we are measuring,” said Celia Chen, director of housing economics at Moody’s Economy.com.
…
In the Bay Area, a Chronicle analysis of data from San Diego’s MDA DataQuick shows that more than one-third of foreclosures are in shadow territory - that is, they are not registering in county records as having been resold.
For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for. [via San Francisco Chronicle]
This article seems to suggest that the very banks that issued the toxic loans are now purposely creating a housing shortage in order to artificially depress foreclosure numbers and in the process drive up the value of their inventory. According to vice president of RealtyTrac, in a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month.” That should give you a sense on the severity of the situation.
I worked at a bank for going on a decade, so take it from me, I do have my facts straight. Because some reporter quotes some stats does not A) make it a fact or B) show the context of the numbers. The fact remains that NO BANK wants to own non-performing asset. Try looking up sometime what the Bank Holding Company Act of 1956 sometime for some of the requirements that Banks have for solvency before you post some reporter to support your argument. Do banks own non-performing assets? Sure. Are they actively seeking the best possible way to get rid of them? Absolutely. Are they doing some OPEC type rationing? Absolutely NOT. Again, you sir, have no idea how much you don't know about this subject.[/quote] You are wrong. DEFLATION is the biggest world concern right now. In ordinary times you would be correct. If the market is flooded right now, the banks would sink themselves. It is in their OWN best interest that these homes are not hitting the market. NEVER a good idea to say "you have no idea" That shows ignorance, too presumptive.[quote=downdowndown]Get your fact correct before you tell someone they have no idea what they’re are talking about.
Banks aren’t reselling many foreclosed homes
Carolyn Said, Chronicle Staff Writer
A vast “shadow inventory” of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”
SEE, THIS IS THE SAME PUNK WHO THINKS HE KNOWS EVERYTHING. LOOKS LIKE AN OPINION PIECE TO ME.
LOOKS LIKE THE INFO IS FROM THE SAN FRANCISCO CHRONICLE. THE BRAIN TRUST IS AWESOME THERE.
LET IT RAIN!!!
Ok, using your flawed logic. Home A is priced at $500k. I can get an interest only loan that has interest only payments for 10 years and is a 30 year ammortized loan for the principle. Home is likely going to be worth $600k next year (20% appreciation was not uncommon in NV, FL, AZ, or CA). Do I do this deal? Of course. Home B is priced at $500k. I can get an interest only loan that has interest only payments for 10 years and is a 30 year ammortized loan for the principle. Home is likely going to be worth $400k next year. Do I do this deal? HELL NO. What was the driving factor? The appreciation of the home. The Community Reinvestment Act of 1994 did go a long way in contributing to some of the 'easy money' people talk about. Question though, why is it the home bubble didnt' start in 1995 then? It was the inflation of the home prices that fed upon itself that caused the bubble. Also, the money became easier to lend based on the appreciation of home values. Little Underwriting tip for you. When you U/W a mortgage you are U/W the risk of two things. The borrower and the collateral. In a normal business cycle of moderate price appreciation the collateral has to have some 'cushion' because Foreclosed properties are sold at a steep discount because banks do not want to own non-performing assets (see above discussion). So either the consumer pays a higher rate and/or has MI or a subordiate lien OR they put money down. This is standard practice along with accounting for consumer credit worthiness. However, when a home price is appreciating at 20%+ the 'RISK' associated with the collateral is materially lower thus the consumer creditworthiness is much less of a factor. If the loan decision is something like "A + B >= Risk" in order to loan (where A is the Collateral and B is the Consumer Creditworthiness) then you can see where A grows B can decline and still be above the risk profile needed to lend money. It was the price appreciation that caused the bubble NOT the easy lending. The easy lending did contribute but was secondary to the price increases.Inflation did not spur the demand for homes, easy money did.
I worked at a bank for going on a decade, so take it from me, I do have my facts straight. Because some reporter quotes some stats does not A) make it a fact or B) show the context of the numbers. The fact remains that NO BANK wants to own non-performing asset. Try looking up sometime what the Bank Holding Company Act of 1956 sometime for some of the requirements that Banks have for solvency before you post some reporter to support your argument. Do banks own non-performing assets? Sure. Are they actively seeking the best possible way to get rid of them? Absolutely. Are they doing some OPEC type rationing? Absolutely NOT. Again, you sir, have no idea how much you don't know about this subject.[/quote] You are wrong. DEFLATION is the biggest world concern right now. In ordinary times you would be correct. If the market is flooded right now, the banks would sink themselves. It is in their OWN best interest that these homes are not hitting the market. NEVER a good idea to say "you have no idea" That shows ignorance, too presumptive.[/quote] Not presumptive to say they have no idea when their previous posts indicate they have no idea. Deflation isn't the biggest concern worldwide right now. Deflation was a concern earlier in the recession. Now that prices have stabilized the biggest concern is spurring demand. That is why the government has an easy money policy, liquidity regarding credit is a major concern and why there is a stimulus bill. All to increase demand.[quote=LSUAlum][quote=downdowndown]Get your fact correct before you tell someone they have no idea what they’re are talking about.
Banks aren’t reselling many foreclosed homes
Carolyn Said, Chronicle Staff Writer
A vast “shadow inventory” of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”
The price appreciation was caused by liar loans and people flipping houses the day they bought them. With the mass marketing of interest only loans people who could never remotely afford a home were blind to the price and were standing in line to compete to buy homes. I live in Florida I know for a fact. I saw it happen. With out the easy money home prices would have gone up the usual 3-6 % per years as they always have.
As far as your underwriting “lesson” that was brushed to the side during the crazyness. Big banks were buying everything they could and all involved ( agents, mortgage brokers, lenders, appraisers )were blinded by greed.
Deflation is the major concern, by no stretch of the imagination have we beat deflation yet. That is why all policies are in place right now. Housing for example…We were flooded with supply that now sits off the market in bank books. We have small increase in demand due to cheap money however, place those homes on the the market and POW BOOM BLAT!! Prices will fall like a ton of bricks. that is deflation. Why is a STRONG dollar govt. allowing US dollar to fall? Keeps the cheap money trade alive. US follows their “supposed” policy BOW BOOM CRACK!!! Prices fall like a ton of bricks!! Again deflation. Govt. spending…Cash for clunkers, home buyers credit etc. all examples of combating deflation, or creating a false demand by making products cheaper for the consumer( deflation ) with the use of YOUR tax dollars. Either way, the fight is still against DEFLATION