Free Houses for Everyone!! Yippeee!!

On a holiday eve, the Treasury announces that they will back Fannie & Freddie to unlimited losses. Yes, you read that right...they will not cap how far or how much they'll back bad mortgages, essentially to infinity. This has caused investors and speculation to scramble about what this means...

One potential answer? Free mortgages!! That's right, big loan forgiveness (similar to how student loans can be forgiven) appear to be a-coming. May wanna start buying some homes if you are the gambling type.

“Given this outlook, we believe that the main driver of this significant change is the flexibility it gives the government to take more aggressive action to support the housing market, including potentially going down the road of allowing some form of principal writedown,

Anatomy of a bank takeover

Ever wanted to know how the process goes down when the FDIC comes to your local bank and says "Move out, we're in charge" to your bank's branch manager? This article goes thru it step by step.

Conservative lending institutions are among the many that are on Calculated Risk's unofficial problem bank list.

American Dream?

The American dream....buy a big house, live in it for a while, then default on the payments and go rent a similar house for cheaper......

Are you unemployed?

The biggest RE land rush right now

Its not here in the US and A...

Its not here in the Northern Hemisphere...

It is not even Australia..

Its...Africa. Farmland is going up for sale and selling in record time. An oncoming food shortage plus CHEAP land plus CHEAP labor makes for a great opportunity for those with big money.

The biggest check ever written..

9 billion dollar check...wow....somehow, I don't think that this record is going to last too long...its the check that saved Morgan Stanley from cradling under..

The Best Investment for 2010-2020

The best stock investment for the next 10 years will be whichever bank/financial institution/lending company figures out a way to lend money to small businesses profitably and with little risk.

Simply put, this will be the BEST INVESTMENT of the next decade, short of a company finding a cure/treatment for cancer or heart disease. Why do I say that? The need is there in the form of ample demand, very limited supply, this/these lending companies can be extremely picky with who they have as customers, and they can get every kind of collateral they want. If they are or become publicly traded, these strong small business loans/lines will be the kind of paper Wall St and foreigners will need to buy. Something that is extremely tight with lending criteria, great assets as collateral, strong base of debtors, and above average returns on loans.

Anyone wanna weigh in or am I just nuts?

Anyways, here's a list of the top 10 stocks from 2000-2010 (or until November 2009)

Want Lower Credit Card Rates? Spend 750 bucks every month!!

Credit card companies LOVE to screw customers. After making them deal with the shock and horror of one time credit rates around 8% get JACKED UP to 29%, Citibank has decided to "make nice" with their customers:

Those who meet the spending minimum , in some cases $750 a month , will be able to get a rebate on their total interest charges for that month. The rebate could cover some or all of the interest rate hike. Customers also need to make payments on time to qualify for the rebate.

Yes, that's right, they want you to spend almost a GRAND every month in hopes to get you trapped further. Unbelievable!

Stupid Americanos....Won't Pay 50 bucks to buy Gold coin worth $1100

Great video that goes to show you how uneducated Americans are with money.

Gold & the United States

Will the US ever sell its gold? Err, will the US ever be forced to sell its gold?

I hope not, but that doesn't mean the day won't come when we'll need to finance our vast debt to pay off our expenditures and future costs (such as the health care bill that just passed the House).

Govt giving ya 5000 smackers to buy a golf cart!

From Doug Casey:

You’re going to love this. I came across a recent story from The Wall Street Journal about how Uncle Sam is now paying Americans to buy, of all things, golf carts. Yes, you too can own that great necessity of modern life thanks to the federal tax credit to buy high-mileage cars that was part of President Obama’s stimulus plan.

Here’s an excerpt from the article:

The federal credit provides from $4,200 to $5,500 for the purchase of an electric vehicle, and when it is combined with similar incentive plans in many states the tax credits can pay for nearly the entire cost of a golf cart. Even in states that don't have their own tax rebate plans, the federal credit is generous enough to pay for half or even two-thirds of the average sticker price of a cart, which is typically in the range of $8,000 to $10,000. "The purchase of some models could be absolutely free," Roger Gaddis of Ada Electric Cars in Oklahoma said earlier this year. "Is that about the coolest thing you've ever heard?"

The golf-cart boom has followed an IRS ruling that golf carts qualify for the electric-car credit as long as they are also road worthy. These qualifying golf carts are essentially the same as normal golf carts save for adding some safety features, such as side and rearview mirrors and three-point seat belts. They typically can go 15 to 25 miles per hour.

In South Carolina, sales of these carts have been soaring as dealerships alert customers to Uncle Sam's giveaway. "The Golf Cart Man" in the Villages of Lady Lake, Florida is running a banner online ad that declares: "GET A FREE GOLF CART. Or make $2,000 doing absolutely nothing!"

Golf Cart Man is referring to his offer in which you can buy the cart for $8,000, get a $5,300 tax credit off your 2009 income tax, lease it back for $100 a month for 27 months, at which point Golf Cart Man will buy back the cart for $2,000. "This means you own a free Golf Cart or made $2,000 cash doing absolutely nothing!!!" You can't blame a guy for exploiting loopholes that Congress offers.

The IRS has also ruled that there's no limit to how many electric cars an individual can buy, so some enterprising profiteers are stocking up on multiple carts while the federal credit lasts, in order to resell them at a profit later. We should note that some states, such as Oklahoma, have caught on to the giveaway and are debating whether to cancel or limit their state credits. But in Congress they're still on the driving range.

Remember, there’s no such thing as a free lunch. When politicians dole out tax credits and other subsidies for their pet projects (green or otherwise), you end up paying for them in the form of higher taxes on other things -- like work and investment -- and a loss of purchasing power of your currency.

Got Perfect Credit? It'll Cost Ya...

Let's see....banks get money from taxpayers to save their sorry behinds..check...

Now what do banks do to forthright customers who have perfect credit? They charge them for it!!

The banks are starting to charge fees to reliable customers in response to a slew of new credit card industry regulations that will limit when banks can hike interest rates. Cardholders who get a new annual fee notice in the mail will be in a no-win situation.

"They can either pay that fee or they can close the account, and if they have had the account for a while and they close it, they are potentially going to hurt their credit card score," said Woolsey.

FDIC Friday Returns!

FDIC Shuts Down 7 more banks in one day!

While banks and thrifts are now well along in the process of loss recognition and balance sheet repair, the process will continue well into next year, especially for commercial real estate," FDIC chief Sheila Bair told Congress last week.

As a result, she said, the number of problem institutions increased significantly, to more than 400 during the second quarter.

Now, with unemployment near 10% and credit card default rates about the same, prime mortgage delinquencies are rising, stoking worries among the nation's banks that despite rising stock markets, fundamental banking industry health remains elusive.

The End of Capitalism??

An excellent read...some confirming suspicions on why capitalism may be long in the tooth.

15 more clues capitalism lost its soul ... is a disaster waiting to happen

Much more evidence litters the battlefield:

1. Wall Street wealth now calls the shots in Congress, the White House

2. America's top 1% own more than 90% of America's wealth

3. The average worker's income has declined in three decades while CEO compensation exploded over ten times

4. The Fed is now the 'fourth branch of government' operating autonomously, secretly printing money at will

5. Since Goldman and Morgan became bank holding companies, all banks are back gambling with taxpayer bailout money plus retail customer deposits

6. Bill Gross warns of a "new normal" with slow growth, low earnings and stock prices

7. While the White House's chief economist retorts with hype of a recovery unimpeded by the "new normal"

8. Wall Street's high-frequency junkies make billions trading zombie stocks like AIG, FNMA, FMAC that have no fundamental value beyond a Treasury guarantee

9. 401(k)s have lost 26.7% of their value in the past decade

10. Oil and energy costs will skyrocket

11. Foreign nations and sovereign funds have started dumping dollars, signaling the end of the dollar as the world's reserve currency

12. In two years federal debt exploded from $11.2 to $23.7 trillion

13. New financial reforms will do little to prevent the next meltdown

14. The "forever war" between Western and Islamic fundamentalists will widen

15. As will environmental threats and unfunded entitlements

Free Stuff, Coupons, 1 Time Offers

From time to time, outstanding offers are made available thru various websites that are out there to help people save a buck. Since saving money by not overextending yourself is one key to becoming wealthy, we here at Contrary Riches will periodically bring the best deals/discounts out there.

1) $55 bucks to start investing in the stock market for those who want to dabble in the Stock Market (available with additional incentives if you are a Costco member)

2) $10 off a $50 purchase at Sherwin Williams for all you real estate minded folk.

3) Free food samples so that you can stock up on food without spending any money.

4) Coupons on household products.

5) Finally, 2 other blogs for you to follow to get the best bargains out there:
Deal Seeking Mom at : http://www.dealseekingmom.com/
Coupon Queen at Big Tent..she feeds her family of 6 for $4 dollars a week by getting discounts galore..read about her here

Truer Words Were Never Said Better

Materialism has not provided what we needed. As our current crisis deepens, luxury cars and Rolex watches will seem so phony. Childish symbols like yellow rubber wristbands and yellow, pink, and rainbow ribbon stickers on our SUVs do nothing to change the world. When you are walking down the street, look people in the eye and say hello rather than staring at your feet or checking your latest email or text message on your “crackberry”. Deeper personal relationships with family and friends will become crucial. The thieves and crooks occupy Washington DC and Wall Street. We do not need what they are selling. Economy sized dreams of hope will sustain the citizens of this great country. Instead of accumulating stuff, give your stuff to people who need it. Donate your stuff to Purple Heart, the Salvation Army, or any other worthy charity. Donate your time to Manna, Habitat for Humanity, or any other worthy cause. Don’t delegate your role in caring for your fellow citizens to the government. Americans will soon realize that what they wanted was not what they needed.

James Quinn, What's My Payment

Top 7 Fears of Real Estate Investors

The Top 7 Fears of Real Estate Investors Today

1. Lack of Cash - Personal incomes are dropping. Unemployment is nearing record highs. Renters in most markets are defaulting. Credit card companies

are cutting the amount of cash available even for those who have amazing credit scores

and always pay back on time.

2. Lack of Confidence - Many investors are lacking confidence in their ability to get through the next three years of this huge downturn. For example, many investors are finding that it's taking months to close a property deal. If you're working real estate short sale strategies, because banks are so burdened with offloading inventory, you could wait six months just to receive a BPO (Broker's Price Opinion).

3. Loan Challenges - A friend of mine couldn't even refinance

his house for a lower mortgage payment than what he's paying right now because the household income dropped since his wife's death. If he can't refinance his home for a lower payment, what do you think your chances of getting a loan are? What's more, banks have raised down payment requirements on residential and commercial properties to as much as 40%.

4. Can't Find Deals - The majority of housing and condo sales are foreclosures, as homeowners don't want to sell now and lose all the value that they put into the house.

5. Not Enough Buyers - Yes, incentives like the tax credit are beginning to enter the market. Yes, we are starting to see a reduction in new inventories. The key word is "starting." Yet in many markets, investors are finding a lack of buyers even at bargain prices!

6. Takes Too Much Time - Many old-hat real estate investors are spending their days and nights trying to close deals. Most of their time is spent late at night on their computers, or traveling around the country hopping from one airport to the next, in hopes of getting that six- or seven-figure real estate deal done, just to be disappointed again and again.

7. Lack of Knowledge - Old-hat real estate investing requires you to understand negotiation strategies, NLP mind tricks, what's-working-now techniques, real estate contracts, and how to adapt to opportunities in more than one marketplace, using more than one investing strategy.

Why its Time to Get Rid of the 401k (which for many is now a 41K)

If you have even peeked at your account statements in the past year, it's painfully obvious that something is wrong with the way we save. The tax-deferred 401(k) plan, and others like it, such as the 403(b) and the IRA, have become our nation's go-to retirement piggy bank. Invented nearly 30 years ago as an executive perk — one more way to dodge Uncle Sam — the 401(k) was never meant to replace the employer-guaranteed pension fund, supplemented by Social Security, as the cornerstone of our nation's retirement system. But propelled by a combination of companies looking to cut costs and consumers who wanted control of their retirement destiny, that's exactly what happened.

collectively we pour more than $200 billion into these accounts each year. But retire rich? Don't bet on it. The average 401(k) has a balance of $45,519. That's not retirement. That's two years of college. Even worse, 46% of all 401(k) accounts have less than $10,000. Today, just 21% of all U.S. workers are covered by traditional pensions, and the number shrinks every year. "The time may have come to consider returning 401(k) plans to their original position as a third tier of retirement planning, behind pensions and Social Security," says Alicia Munnell, who heads the Center for Retirement Research at Boston College. "They should not be the thing we rely on for retirement security." And the government seems to agree. This summer, the Government Accountability Office concluded, "If no action is taken, a considerable number of Americans face the prospect of a reduced standard of living in retirement." That's what is known as an understatement.

TIME MAGAZINE

Multi-Millionaire by 24- How One Kid Did It

Certainly goes to show you that success can come with hard work. Someone needs to tell broke ass Donald Trump to learn some lessons from this kid on how to do successful real estate deals.

Adam Blake made one of his first life-changing decisions as an eighth-grader in Kansas City. He made another just a couple of weeks ago.

Blake, 24, who has made a residential real estate business he started as a sophomore at Texas Christian University into a multimillion-dollar venture, in September closed on the purchase of the historic Electric Building in downtown Fort Worth from billionaire Robert Bass.

Blake hopes it will be the first of several commercial real estate buys. The deal, though, catapulted him into a market dominated by local deep pockets, institutional investors and older developers — right where he wants to be.

His company Atlas Properties was on the latest Inc. 500 list of fastest-growing private U.S. companies, reporting 2008 revenues of $5.8 million, up from $382,778 in 2005. And that’s just one of the nearly dozen companies and investment funds he owns. Another is Blake Venture Corp.

His youth does get in the way of deals, he said. Recently, he wanted to buy a Houston apartment community, but the broker involved asked to see his personal bank statements before he’d accept his offer.

"One guy told me he thought a deal was out of my league because he read on one of my Web sites that I am only 24," Blake said. "Definitely, age can be a hurdle."

Retail Sales over the past 6 years

Shoppers’ Shifting Priorities

click for readable graphic

courtesy NYT

Risky Business: Betting on a home's value

There are some sure bets that are prudent to take, such as:
1) Tiger Woods kicking your ass in golf
2) The next Hugh Grant movie likely to suck
3) Kanye West to say something dumb
4) Laws against doing things on your cellphone having no effectiveness on behavior

But one thing that USED to be a sure bet and is no longer....the value of your house. From the Washington Post:

"We have cases where houses are being appraised at less than the cost to build them," Howard said. "People are just being really, really conservative."

Some housing industry insiders also say that the appraisal process has become more complicated since the implementation of a new set of rules, known as the Home Valuation Code of Conduct, in May. The rules, put in place by Fannie Mae and Freddie Mac, aim to shield appraisers from pressure to submit a desired estimate of a home's value to hasten its sale.

Investing in Time Shares PLUNGE!

One of the worst investments of all time is the infamous time share. Notorious for pushy salespeople that put car salesmen to shame, time shares have always been one of the biggest ripoffs that occur to put people in debt. Now, in a deprecession, the time share boom is finally being exposed for what it is.

U.S. timeshare sales dropped 8.5 percent last year to $9.7 billion from a peak of $10.6 billion in 2007, excluding the luxury fractional business and private residence clubs, according to an Ernst & Young LLP study prepared for ARDA. The decline was the industry’s first since 1975 and is being driven by tighter credit, a higher personal savings rate and the loss of 6.9 million jobs since the recession started in December 2007.

AND

Mark Massarelli, who runs Dynasty Limousine in Boston, has been trying to sell one of two timeshares in Hollywood, Florida, that he and his sister inherited from their mother. He has been advertising a one-bedroom, one-bath unit on Craigslist.org for six months. It’s at a full-service oceanfront property with access to an 18-hole golf course.

Massarelli, 46, hasn’t received any inquiries even after cutting the price twice.

“I am offering it at $3,995 but its value right now is probably around $8,000,” Massarelli said in a telephone interview. “I tried to sell it a couple of times for a higher price but nobody bit. The maintenance and taxes on the unit are getting expensive. So I cut the price to attract more buyers, but nothing so far.”

Hey Mark, if you can't sell it for 3995, then its value is NOT $8000, its whatever you sell it for!!

Are we supposed to be surprised???

Cash for Clunkers only worked while the cash was available for buyers? You mean it had no carryover effect? Wow, what a shocker!!

U.S. auto sales likely fell in September back to the nearly three-decade lows of early 2009 without government incentives to spur buying, leaving in doubt the timing and pace of a recovery for the battered industry.

Nearly 700,000 new cars and trucks were bought by U.S. customers through the government "cash for clunkers" incentive program from late July through the first three weeks of August, a leap from recession-stunted sales earlier in 2009.

However, none of the largest manufacturers are expected to post sales gains in September, and Edmunds has forecast a 23 percent industry sales decline for the month.

Bye bye, US Dollar. Hello.....(global currency? Renmibi? Euro? Gold?)

Ouch, baby...very ouch...

"The dollar looks awfully like sterling after the First World War," said David Bloom, the bank's currency chief.

"The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100pc of GDP," he said

So what does this mean?

"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it."

Robertson said inflation is a big risk if foreign countries were to stop buying bonds.

“If the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent,” he said. “It's not a question of the economy. It's a question of who will lend us the money if they don't. Imagine us getting ourselves in a situation where we're totally dependent on those two countries. It's crazy.”

China (remembering the golden rule...he who has the gold makes the rules) has this to say:

China, meanwhile, continues to flex its muscle.

It has proposed that the G20 economies consider setting up an international wealth fund that would invest a portion of its members' current-account surpluses in developing economies.

"These comments reinforce their desire to diversify out of dollars and to encourage other nations to do so as well," said Kathy Lien, chief strategist for Global Forex Trading.

A few Chinese deals were recently seen accepting payment in the currency of the buyer rather than in dollars, especially with Brazil, which the Asian giant is wooing as a future oil supplier.

In addition, China -- the first nation to sign an agreement to buy IMF bonds -- took the unsual step of paying for the papers equivalent of 50 billion dollars with its yuan currency rather than dollars, which Beijing uses for much of its trade and other foreign transactions.

A Change in Lifestyle of the United States

Consider the following 2 articles:

Meltdown gives consumers a new money mindset:

In ways big and small , from scrutinizing their bills and joining credit unions to scaling back weddings and college plans , people are finding creative ways to deal with the worst recession in a generation. In short, there's a quiet revolution taking place in the way people save, borrow and spend that represents a retreat from old habits, and the first steps toward new ones.

The changing behavior can be seen in other ways:

, Two years ago, the average amount spent on a wedding was $28,000, according to the Wedding Report, a market research company in Tucson, Ariz. Last year's average: $21,800. The second quarter of this year: $16,550 , 42 percent below the 2007 average.

, While enrollment numbers aren't yet available, public colleges reported a 14 percent spike in applications last spring, suggesting some students and their families are shifting from private schools so they can spend less.

Census: Recession had sweeping impact on US life

The homeownership rate fell to 66.6 percent last year, the lowest in six years, after hitting a peak of 67.3 percent in 2006. Residents in crowded housing jumped to 1.1 percent, the highest since 2004, a sign people were "doubling up" with relatives or friends to save money.

_ The share of people who carpooled to work rose to 10.7 percent, up from 10.4 percent in the previous year. Commuters who took public transportation increased to 5 percent, the highest in six years, with Washington, D.C., at the top.

Roughly half the states showed declines in the number of immigrants from 2007 to 2008. Major metro areas also posted decreases, including Los Angeles, Phoenix, Detroit and Tampa, Fla. An influx of workers from India, who came looking for specialized jobs in telecommunications, manufacturing, computers and software, partially offset the national immigration decrease.

When will Real estate return to its peak values?

From Moody's:

The reality of Cap & Trade

Trade Wars between China & US?

Definitely NOT a good thing when one debtor (the US) starts up a trade war with their enabler (China).

China lashed a U.S. decision to impose duties on Chinese-made tires, calling them flagrant
protectionism that sent the wrong signal before the next G20 summit and risked a "chain reaction" that could slow global recovery."China strongly condemns this grave act of trade protectionism by the U.S.," the spokesman for China's Ministry of Commerce, Yao Jian, said in a statement issued on the Ministry website on Saturday.

Random Musings & Clicks

6 Things I Think:

1) Gold is at an all time high (not inflation adjusted). Gold as a precious metal/hard asset is one of the 5 branches of investment everyone should own. However, now may not be the best time to buy into the market. I fear that if gold goes past 1040/ounce, you'll see the general public run into gold pushing it to 1200+, which means you should sell, as whenver the masses enter the market, the smart money leaves.

2) The tax credit for home purchases is running close to the end (November 30 is the closing date for those to qualify). There is a fear out there that this will either be extended & increased (causing buyers to not want to buy right now) or not renew (causing fools to overpay). It balances each other out. More concerning is the FHA running out of money to be at their reserve requirement.

3) Eviction patrols overloaded with foreclosures. Nuff said.

4) Wells Fargo Executive Parties in Foreclosed Home. Wow, another nuff said.

5) Russian leader demands curbs on alcohol purchases. Yeahhhh, sure. Telling Russians not to drink is like telling a stoner not to smoke it up.

6) Harvard & Yale the big losers in investing. Just goes to show you that an Ivy League education doesn't mean shit....all it gets you is connections & networking. With the advent of social networking, this may make Ivy's a little more obsolete.

Debtors Revolution & How Banks are shhhh QUIETLY Negotiating down debts

Gotta LOVE this...a debtors revolt is going to happen if this gets passed along!



The Washington Post reports on the quiet practice going on by banks of secretly negotiating with cardholders to let them lower their debt amount & interest.

What's going on in this country

It's been a while since I've been a guest poster on this blog. Thanks to my dear friend to keep it going. Things have been crazy lately. I am in the process of trying to close what was once a thriving prosperous business. I guess truly it wasn't all that thriving since it was all smoke and mirrors because of much money out there, due to the ridiculous loose lending practices of the recent boom. It is ironic that the ones who created this mess we are in are bailed out by the same corrupt government that encouraged it, and quite possibly forced it. All the while they are getting sweet mortgage deals from the orange man. If there is a hell, Chris Dodd, Pelosi and all the other "put money in my pocket" congressman will have to answer for their sins. Our government has put themselves before the people. They are public servants.

Wall Street's Next Bubble

Some think the next bubble will be in "green jobs/green economy", others think it will reoccur in real estate, some say in China stocks (which we called for a popping of that bubble here)

So inquiring minds want to know..what is Wall Street's next bubble? Here's a preview:

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them.

"Buns" Bernanke Can't Be Happy bout this...

No, I'm not talking about this picture...hat tip to Jrdeputyacct!

Bun, er, Ben Bernanke cannot be happy that the Chinese are gladly putting aside dollar/treasury/Fed note purchases and are finding that they can:
1) Buy gold
2) Buy IMF bonds (the first 50 billion issued)
3) Use their current dollar horde to buy assets around the world

Free For All Links to Interesting Articles

Top 6 Financial Articles of the Day:

1) Homeowners Becoming Reluctant Landlords

2) Goodbye Fannie/Freddie, hello McGee? Simply put, the MCGE buys mortgages from banks, pools them into securities, pays an insurance premium to a new government fund and then sells them to investors with government guarantees against the default of those securities. So the investors take the interest rate risk but they are not taking a credit risk.

3) Has the Obama administration failed already? Here are 10 things to do to restore their hope

4) An inventive way to clean up foreclosed homes with pools

5) Florida may invest in Florida real estate

6) Making the switch from being nice to banks to being tough on them

Improving your credit score based on New FICO method

The latest update to FICO's scoring model may result in a very good thing for many people...a higher score. Some changes include:

Under the updated scoring model, called FICO 08, small, missed payments lingering in collections with original amounts of $100 or less will no longer do damage to your credit score.

Consumers also are less likely to be penalized for any single delinquency if it occurred two or more years ago - and if their credit history is otherwise unblemished, says FICO, formerly Fair Isaac Corp., which developed the FICO scoring system.

As noted in this article here, even if you get a credit limit cut, it may not have that much of an impact on your scores.

Of course, if your scores are really bad, you can go into a career of making cover songs about the financial crisis, much like this Pink Floyd remake:

This video says it all...Yes, The Government Can!

Banks & their foreclosures part deux

Interesting info from CNBC's Diana Olick:

I spoke with Ted Jadlos of LPS Applied Analytics. He says there is no clear evidence of purposeful accumulation by the banks of these foreclosed properties. They are, he believes, working through the huge onslaught of new defaults as fast as possible, but it takes time. He says they are selling REOs at a fast clip as well, within about three months of taking them as REO.

Jadlos notes: Just getting to the average isn’t saying all that much. We need to be close to the four year low to be fully entrenched in a meaningful recovery. Based upon foreclosure and REO timelines, it’s going to take at least 18 months to flush the system of our current problems. But to flush the problems in only 18 months, more problem loans need to leave the system relative to the new problem loans of today and tomorrow. That does not appear to be the case right now—we aren’t clearing faster than new problems are emerging.

The UnderWear Indicator...

Briefly, ahem...men's underwear sales typically are a good indicator of the economy. When sales are short and tight, the economy tends to cling down. When sales are riding high, the economy tends to perk up.

Sales of men's underwear typically are stable because they rank as a necessity. But during times of severe financial strain, men will try to stretch the time between buying new pairs, causing underwear sales to dip.

"It's a prolonged purchase," said Marshal Cohen, senior analyst with the consumer research firm NPD Group. "It's like trying to drive your car an extra 10,000 miles."

The growth in sales of men's underwear began to slow last year as the recession took hold, according to Mintel, another research firm. This year, Mintel expects sales to fall 2.3 percent, the first drop since the company started collecting data in 2003.

But the men's underwear index may also have a silver lining. Mintel predicts that next year, men's underwear sales will fall by 0.5 percent, and as with many economic indicators, a slowing of a decline can be welcomed as a step in the right direction. Retailers are reporting encouraging signs in the men's underwear department

A Dickens Tale: 2 Economies, 1 Country

Seems like everyone is in a Charles Dickens mood this weekend, as many posts on blogs and financial websites are about 2 economies emerging: Marketwatch mentions about how the manufacturing sector is recovering, but the labor market is not.

Mike Shedlock's terrific Global Economics blog makes a great notation about how 2 types of companies have fared well during the credit bubble: Those who stayed away from debt to hoard cash, and those who just relied on bailouts. Companies that were in the middle that did not either have full cash or relied on taxpayer funds have done the worst.

But there's nothing more symbolic of a market approaching a top than when you start reading stories of people abandoning buy and hold strategies for a heavy trading strategy focusing on risky stocks with so-so fundamentals.

The 50-year-old from Naples, Fla., had limited investment knowledge but attended several seminars before starting to trade in May. So far, York said, she's up an average of 40% a month and is trading full time."It's the best job I've ever had, not just for the enjoyment but from the compensation standpoint," said York, who previously sold telecom equipment. "I've replaced a significant six-figure income."

Bear market rally? New Bull Market? bounce?

Let's see...Gold has been relatively flat this year. Stocks are up 53% since the President told ya to buy stocks. The dollar is down. Oil is sorta up depending on what time frame you look at. Natural Gas is low. Real estate in some aspects is making a comeback. So where are we exactly?

We are in a place where lies permeate and are given credence and truth is shied upon. This is what a bear market rally looks like. And like many astute market observers predicted, it can last a long while. Eventually the truth does come out, but usually after the market makers have sucked the general public in (see tech stocks, housing, and maybe green stocks next).

Just desserts- Bernanke's phony identity

You reap what you sow...looks like Ben Bernanke had his identity stolen.

You can't make this stuff up....the irony of a guy who is overinflating the US economy had his account stolen and his money was used to inflate other accounts. And best of all, he had his bank account with Wachovia...

At least ONE Fed official is telling the truth about employment:

The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday.

"If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.

United Subsidy of America part 2..and your Clunker is Taxable

First big surprise....trading in your clunker for 4500 dollars is TAXABLE...OOPS, talk about forgetting to tell the American consumer that....

Wow...Subprime lenders getting subsidies to write out loans..what a shocker....NOT...

lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. Of the top 25 participants in the program, at least 21 specialized in servicing or originating subprime loans, according to the center, a nonprofit investigative reporting group funded largely by charitable foundations.

Much "of this money is going directly to the same financial institutions that helped create the sub-prime mortgage mess in the first place," Bill Buzenberg, executive director of the center, said in a statement.

For example JP Morgan Chase, Wells Fargo and Countrywide, are eligible to receive billions of dollars under the program, according to the report.

Preparing for the Worst? Or Expecting the Best?

Looks like Robert Kiyosaki, of Rich Dad Poor Dad fame, thinks the big mess is no where near the end. Interesting article full of good points, some of which I agree with.

Consumer Confidence Index says the opposite..that the majority of people think things are getting better.

Short run, I think things are looking up...long run, I'm thinking Kiyosaki's ideas are more likely to pan out.

America: Land of the Subsidized Investment

Can't decide what's worse for our country....

1) The US underwriting offshore drilling in Brazil to help THEIR companies find oil and then sell it to us at market value... OR

2) The US subsidizing Chinese investors to invest into the US at taxpayers expense up to 6x leverage OR

3) The US about to subsidize toxic loans to banks AGAIN

Banks in trouble all around

The media has done a pretty good job of keeping quiet about it, but we are close to another banking crisis...eerily close. The FDIC is running out of money. Now there is strong news floating out that Guaranty Bank and its 14 billion in assets is about to come to a close.

The good news is that anyone wanting to know possibly which banks may be in trouble can look at this list generated by Calculated Risk (unofficial list)

http://www.calculatedriskblog.com/2009/08/problem-bank-list-unofficial-aug-14.html

All About Housing: Inside Mortgage Agents Report

Comprehensive 80 page report on housing, the banks that do the lending for housing, and all sorts of useful nuggets, such as:

 The market for home purchases can be divided into segments of 26% for
damaged REO, 23% for move-in ready REO, 14% for short sales, and 36% for
non-distressed properties.
 Forty-three percent of homebuyers are first-time homebuyers, 29% are current
homeowners, and another 29% are investors.
 First-time homebuyers account for the majority of move-in ready REO sales while
investors account for the majority of damaged REO sales.

Plus, a breakdown on how the big banks deal with their short sales.

Five Bank FDIC Friday Returns!

The biggest failure of the year, plus 4 other banks are making the FDIC's Friday gig a lot more work on a weekend than any other government employee has ever done!

A good article was written about 12 bubbles that are due to pop...I'll add the FDIC's bank closures as another bubble waiting to pop...they will at some point run out of money.

TARP Money for apartment complexes?

The bill, which is called the TARP for Main Street Act and was sponsored by House Financial Services Committee Chairman Barney Frank (D-Mass.) and Rep.Velasquez (D-Brooklyn and Manhattan), would use TARP funds that have been returned by banks and plow it into programs that, according to the bill, would create "sustainable financing" for the complexes as well as provide funding for property rehabilitation.

No Food in Detroit= Armed Grocery Deliveries! Is Detroit the Next Farmland?

There isn't a single major chain supermarket in the city, forcing residents to buy food from corner stores. Often less healthy and more expensive food.

As the area's economy worsens --unemployment was over 16% in July -- food stamp applications and pantry visits have surged.

Detroiters have responded to this crisis. Huge amounts of vacant land has led to a resurgence in urban farming. Volunteers at local food pantries have also increased.

But the food crunch is intensifying, and spreading to people not used to dealing with hunger. As middle class workers lose their jobs, the same folks that used to donate to soup kitchens and pantries have become their fastest growing set of recipients.

RipOff City....Bank Overdraft Fees Make them $38 Billion

Here we go again....banks ripping off the consumer while claiming they are providing a service to their bail out partners.

Remember, these are the same assholes who make

70% of the overdrafts happen at a POS terminal or ATM, not by writing a check.

The last statistic is the clear one: There is no reason whatsoever for anyone to take such a hit. The bank knows before they approve the transaction that the money isn't there in the account.

This is not the same thing as a check, which the bank has no way to warn you about before you write it, as there is no "connection" between your checkbook and their computer.

IF we had honest regulators it would be strictly unlawful for a bank to intentionally approve a debit transaction which it knew you did not have the funds to settle unless you had an established overdraft line of credit (at a reasonable APR.)

Take solace in the fact that 1 in 6 banks in Georgia are in a big bag of deep dog crap.

Life in the Recession...401Ks going, mansions not selling, and recessions finishing

Life in the Recession
Insightful piece by Michelle Singletary of the Washington Post. With more and more employers opting out of matching employee contributions, the 401K may have a limited shelf life as an investment vehicle for people. Another casualty of the recession?

Recession is also hurting the sales of mansions, as more and more of them are going on the auction block with auction companies setting up straw buyers to prevent embarrassment for the sellers.

Then there are guys like Dennis Gartman, who is a sage pundit who is saying the recession ended last month.

Others say "Beware the Bear"

Free Cash for old stuff (non-clunker cars!)

Looks like there are a few non Federal programs that let you trade in junk for cash/rebates like the Cash For Clunker programs, as well as several free stuff being given out. Here's a sampling..click the links:

Radio Shack Trade-In Program: Trade your old electronic devices for a gift card
Cash For Refrigerators- Several states are implementing this program
Freebies- Free Food, Free Crest WhiteStrips, etc
Another list of Freebies
A no-penalty Certificate of Deposit...doesn't cost you anything if you at some point need the money and want to close the account or take some out.

Finally, a list of all the places that offer you free money for opening an account, becoming a member, switching credit card accounts, etc.

A look at Underwater Home Mortgages- 50% of homeowners by 2011?

Courtesy of Deutsche Bank- click for 19 page report

Why Hot Waitresses Are A Bad Economic Sign

As a person who enjoys eating out, I have noticed, as I am sure many of you all have, that the quality of service in restaurants is getting better and the wait staff are getting more attractive.

The hotter the waitresses, the weaker the economy. In flush times, there is a robust market for hotness. Selling everything from condos to premium vodka is enhanced by proximity to pretty young people (of both sexes) who get paid for providing this service. That leaves more-punishing work, like waiting tables, to those with less striking genetic gifts. But not anymore.
A Soho restaurateur I know recently received applications from “a couple of classic Eastern European fembots. Once upon a time, these ladies must’ve made $1,500 a night lap dancing. At my place, they’re not going to make that in a week.”

Commercial Real Estate, Rent Reduction, and what it all means

Kudos for Mish for reporting on that office space is down 50% in value, retail vacancy is at 7.5%, and industrial space is at its lowest demand in decades.
Ritholtz has the story on the shadow inventory in housing
But the story of the day belongs to the subject of rent reduction free for all.

Last month, commercial real estate research firm Reis Inc. reported that the steepest rent declines since 2002 occurred at shopping malls between April and the end of June. The threat of vacancies was to blame.

Joe Coradino, who oversees retail leasing for Pennsylvania Real Estate Investment Trust, said last week that "everybody who could was asking for rent relief. It was a free-for-all."

PREIT, which owns Cherry Hill, Willow Grove Park, and other malls, even formed a "lease modification review committee" to handle the influx, Coradino told me yesterday. Requests have finally slowed down, though.

The Gubmint's latest plan to rid of us debt

U.S. Government Stages Fake Coup To Wipe Out National Debt

America's Crappiest Company

It has to be said...GE is a giant hedge fund masquerading itself as an industrial & financial conglomerate. Now comes word from the SEC that GE lied about their earnings (what a shocker). GE has admitted that it wants to reduce their earnings that come from GE Capital (their ambiguous financial arm). On top of that, their "financial network" CNBC should change their name to "Continuous Nonsense Blasted Continuously". Not to mention their dealings with Iran.

Don't get me wrong..I like a lot of what GE makes. They are well positioned to capitalize on green energy (although they may not be selling as many windmills as they thought now that T Boone Pickens is backing off his plans for wind farms). They are also involved very nicely in the water industry. GE can improve itself, but it will require getting rid of its piss poor management and focusing on what made it a global titan...making innovative products that are simple yet worthy of a pent up demand. Then, it will become a dividend paying, steady growth company instead of some wacky bizarre mix of light bulbs, appliances, and subprime mortgages. Bear in mind this post is about GE as a company, not as the stock.

Fannie & Freddie: We probably aren't going to pay taxpayers back

And there you have it, folks. 85 billion down the drain. Fannie & Freddie's regulator says their book is so large that its unreal to expect the quasi government agenices to pay back its debt. When will Social security and Medicare come out with their similar findings?

No matter where you stand on the end of the housing bubble or just a temporary increase, long term it looks like the US made a bad bet in bailing out Fannie & Freddie.

Crap for Clunkers

Looks like nobody knows how to spend like the good ole gubbamint, eh? How do you manage to lose $1 billion dollars in the span of 4 days? Easy, promise everyone a program that has no need and you'll find out that within a WEEK, you need an additional 2 billion dollar injection to save a program.

And these are the same morons who want to run our health care? The same morons who say they will be able to keep health care spending under control? Here's a better reading of keeping health care that people will like...and it involves MINIMAL involvement of the liberals in government.

Otherwise what you'll get is a new kind of clunker program...one in which the government considers your parents and grandparents to be clunkers to be traded in rather than allowed to live a full life.

Only the Lonely...funny can't make it up real estate stories of the day

Seems like this stuff is ridiculous but true...

Victor Vangelakos lives in a luxury condominium tower on the Caloosahatchee River. He never has to worry about the neighbors making too much noise.
There are no neighbors.Vangelakos, 45, his wife Cathy and their three children are the only residents in the 32-story Oasis I condo on the east edge of downtown Fort Myers.

At the same time, our idiot Treasury Secretary Tim Geithner can't sell his own house...maybe because, I dunno, its WAY overpriced??? Daily Show skewers him!

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Home Crisis Investigation
www.thedailyshow.com
Daily Show Full Episodes Political Humor Joke of the Day

"Economy Matters" starring Barack Urkel?

Is the next bubble in China? I vote "Yes"

The writing is on the wall. China's stock market is up an astounding 79% year to date. Unbelievable, but considering that last year their markets got clobbered, it is somewhat too much too soon. On top of that, Chinese banks are lending like crazy and building everything everywhere while they are still holding loads of US dollars.

In one sense, its a smart strategy in some sense, as John Mauldin pointed out...they are playing a game of "old maid", where they don't want to be the last one holding US dollars. In another sense, they've stimulated too much rather than let natural growth occur. More and more IPO's are hitting their market, which means the top is near and a beatdown is coming. Long term, they'll be a good buy, but not today.

Banks making more $$$ from Foreclosures than Loan Mods

And now, the truth starts coming out...the banks would rather foreclose than do a loan modification out of a belief that many people are capable of "self curing" their default and don't need to do a loan mod.

The problem is that modifying mortgages is profitable to banks for only one set of distressed borrowers, while lenders are actually dealing with three very different types. Modification makes economic sense for a bank or other lender only if the borrower can't sustain payments without it yet will be able to keep up with new, more modest terms.

A second set are those who are likely to fall behind on their payments again even after receiving a modified loan and are likely to lose their homes one way or another. Lenders don't want to help these borrowers because waiting to foreclose can be costly.

Finally, there are those delinquent borrowers who can somehow, even at great sacrifice, catch up without a modification. Lenders have little financial incentive to help them.

When Your State Goes From NonRecourse to Recourse Mortgages

Hat tip to Housing Doom on this one...

I smell the law of unintended consequences about to happen here...the state of Arizona, in their infinite wisdumb, have decided to make some mortgages into recourse mortgages (where you have to pay back the entire amount), a change from it being non-recourse. (where you just lose title to the home).

The new law would affect any Arizona homeowner in foreclosure who has not lived in the home for six straight months. This might include landlords, second-home owners and investors who bought homes hoping for quick resales and big profits. Once the home is sold in foreclosure, the homeowner would have to pay back the remaining value of the loan, minus the proceeds from the foreclosure sale. Currently, Arizona homeowners, including investors, who lose a house to foreclosure take a big hit on their credit scores but aren't usually required to pay back lenders.