US - Subprime

Re: Subprime

Postby millionairemind » Thu Dec 04, 2008 6:03 pm

The Economist carried an article a few months back that reported that the housing crisis (subprime) situation is actually worse in the UK. Let me try to find that article..

December 4, 2008

House prices fall at fastest rate in 25 years
Rosie Lavan
British house prices tumbled at a record 16.1 per cent in November, marking the sharpest drop in property values for a quarter of a century.

Figures released this morning by Halifax revealed that prices fell 2.6 per cent in November compared to October, and are now 16.1 per cent lower than in November 2007.

The year-on-year decline is deeper than falls recorded during the last recession in the early 1990s, and is the biggest drop since 1983.

The shock fall has emerged just hours before the Bank of England's Monetary Policy Commitee is expected cut the interest rate again, after last month reducing borrowing costs by 1.5 per cent to 3 per cent.
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Re: Subprime

Postby LenaHuat » Thu Dec 04, 2008 6:16 pm

Yes, it's a meltdown in the UK.
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Re: Subprime

Postby millionairemind » Fri Dec 19, 2008 8:55 am

Now how's that for dessert??? :twisted:

Credit Suisse bankers are getting toxic bonuses

By Louise Story and Julia Werdigier Published: December 18, 2008

NEW YORK: As Wall Street banks face public outrage over the large bonuses they plan to pay workers this year, Credit Suisse's investment banking unit told senior bankers on Thursday that they would have to eat their own cooking.

Credit Suisse will pay a portion of bonuses for thousands of its senior investment bankers using shares of troubled assets left over from before the financial crisis.

These assets - mostly leveraged loans and commercial mortgage bonds - are selling at distressed levels, if at all, and continue to cause devastating losses across Wall Street.

"In an industry where many competitors have gone out of business, people have lost their jobs, where regulators are ratcheting up their requirements, the public at large doesn't believe investment bankers should be paid much, if anything," Paul Calello, the head of the investment bank, said in a telephone call with senior bankers, according to two people who were on the call.

Banks like Goldman Sachs, Morgan Stanley and Merrill Lynch are completing their bonus pools and will begin announcing awards to their employees in coming weeks. Bank executives have said that bonuses will be lower this year, and that the top executives will not receive bonuses at all.

But even scaling back pay drastically would still add up to significant bonuses for rank-and-file traders and bankers. Banks say they need to pay these employees something above and beyond their salaries to keep them coming to work. But critics say bonuses should be reconsidered, given the billions of dollars of taxpayer money that has been injected into many of the banks.

"This should be a year of no bonuses for any firm that took bailout money," said Peter Singer, a philosophy professor at Princeton University and a pre-eminent ethicist. "The assumption of having to take public money is that your firm is in an emergency situation, and you put out your hand for public help."

Credit Suisse also said it would introduce "claw-back" provisions on the cash portion of bonuses, allowing it to take back part of workers' pay in the future if their bets turn out to have been flawed. That follows similar announcements by Morgan Stanley and UBS.

But Credit Suisse is the first bank to weight its bonuses this year with toxic assets left over from its past. The bank said that $5 billion of the assets it has had trouble selling would be put into a new investment vehicle that it was calling the Partner Asset Facility. Shares of the vehicle will be given to its managing directors and directors as part of their bonuses, replacing some of the cash and stock that would have been paid in bonus money.

Of course, the bank's shareholders already felt the pain from much of the assets that will be put in the vehicle. Credit Suisse has been among the most aggressive in its write-downs. The assets in the new vehicle are already marked at 65 cents on the dollar, on average. That means if the assets recover, the bank's employees - not shareholders - will be the ones to benefit.

The asset plan, however, allows the bank to save money on compensation this year, which benefits shareholders, according to a spokeswoman. And many banks have sold toxic assets to outsiders at steep discounts, passing on the opportunity to reap any future gains.

Credit Suisse's asset plan does not include provisions for troubled assets it might create in the future, and some experts on compensation said the industry should focus more on broader reforms of employee pay. Financial workers often play a role in valuing the investments they make, and they have incentives to be optimistic in the short-term.

"Wall Street disproportionally focuses on short-term results compared to other industries," said Richard Cellini, a senior vice president at Integrity Interactive, a consulting firm in Waltham, Massachusetts. "In the short run, we all look like geniuses. It's the middle run that counts in most businesses."

Credit Suisse said this month that it would cut 5,300 jobs, or 11 percent of its work force, and that its top executives would not receive any bonuses for this year. For the third quarter, the bank posted a loss of 1.26 billion Swiss francs, worth $1 billion at the time, with the securities unit reporting a pretax loss of 3.23 billion francs after 2.43 billion francs of write-downs.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Re: Subprime

Postby mojo_ » Sun Dec 21, 2008 10:38 pm

TED spread heading in the right direction...

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Not what but when.
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Re: Subprime

Postby millionairemind » Wed Dec 24, 2008 8:37 am

U.S. Economy: Home Prices Fall Near Depression Pace (Update1)
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By Bob Willis and Shobhana Chandra

Dec. 23 (Bloomberg) -- Sales of single-family houses in the U.S. dropped in November by the most in two decades and resale prices collapsed at a pace reminiscent of the Great Depression, dashing speculation the market was close to a bottom.

Purchases of both new and existing houses dropped 7.6 percent from the prior month, the biggest decline since January 1989, to an annual rate of 4.43 million, government and industry figures showed today. A 13 percent drop in the median resale price from a year earlier was the most since records began in 1968 and was likely the largest since the 1930s, the National Association of Realtors said.

“Housing is still in a freefall,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts.

The figures were worse than economists had forecast and signal that the battered housing market that led the economy into a recession may be taking another lurch down. Sliding property values mean more Americans will be under water on their mortgages, destroying household wealth and undermining consumers’ purchasing power.
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Re: Subprime

Postby kennynah » Wed Dec 24, 2008 10:27 am

this new house purchase or existing homes purchase figures are both very important to hint on any recovery in their property market....duh...i am stating the obvious

i feel it is equally important to monitor the inventory levels.... this is part of the demand / supply equation... if inventory still high... no good... must continue to lower...then it is a good sign...
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Re: Subprime

Postby millionairemind » Thu Jan 15, 2009 5:54 pm


US foreclosures spike 81%


WASHINGTON - US home foreclosures, the epicentre of the global financial crisis, spiked 81 per cent in 2008 despite efforts to slow the 'tsunami,' a data tracking firm said on Thursday.

National foreclosure filings - default notices, auction sale notices and bank repossessions - totaled 3.16 million and were reported on 2.33 million properties last year, said RealtyTrac, an Irvine, California-based company.


One in 54 housing units, or 1.84 per cent of all US housing units, received at least one foreclosure filing during the year, up from 1.03 per cent in 2007, the firm said.

In December alone, foreclosure filings spiked 17 per cent from the previous month to 303,410 properties. That was nearly 41 per cent higher than in December 2007.

On a quarterly basis, foreclosure activity in the fourth quarter fell nearly four per cent from the third quarter but was still nearly 40 per cent higher than a year ago.

'State legislation that slowed down the onset of new foreclosure activity clearly had an effect on fourth quarter numbers overall, but that effect appears to have worn off by December,' said James Saccacio, chief executive of RealtyTrac.

Mr Saccacio said the big jump in December foreclosure activity was 'somewhat surprising' given the moratoria on foreclosures by both Freddie Mac and Fannie Mae and programmes from some of the major lenders and loan servicers aimed at delaying foreclosure actions against distressed homeowners.

'Clearly the foreclosure prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami,' he said.

Highest foreclosure rates
Nevada, Florida, Arizona had the highest state foreclosure rates in 2008.

Nevada topped the list with more than seven per cent of Nevada housing units - one in 14 - receiving at least one foreclosure notice.

A total of 77,693 Nevada properties received a foreclosure filing during the year, an increase of nearly 126 per cent from 2007.

Florida was number two, with 4.52 per cent of its housing units, followed by Arizona, with 4.49 per cent.

Rounding out the top 10 state foreclosure rates were California, Colorado, Michigan, Ohio, Georgia, Illinois and New Jersey.

The 2008 total foreclosure filings were a whopping 225 per cent higher than in 2006, when the housing bubble began to collapse mid-year.

Falling home values and tight credit pushed borrowers with subprime, or high-risk, home mortgages to default, sparking the financial crunch that turned into a global crisis in August 2007. -- AFP
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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Re: Subprime

Postby millionairemind » Thu Feb 05, 2009 12:29 pm

Feb 5, 2009
US housing market bottoming
NEW YORK - US housing markets from Florida to California have suffered price drops of 50 per cent or more from their peak, but now, at long last, a bottom is within sight, likely in the fourth quarter nationally, according to a report from Moody's Economy.com.

By the end of the housing downturn, nearly 62 per cent of the nation's 381 metropolitan areas will have experienced double-digit-percent declines in house prices, peak-to-trough, says the report by chief economist Mark Zandi and a team that includes Celia Chen, senior director of housing economics.

The declines will exceed 20 per cent in about 100 metro areas, according to the report, scheduled to be discussed in a webcast on Thursday. An advance copy was given exclusively to Reuters.

Despite the gloomy data, the report, by an independent subsidiary of Moody's Corp, paints an improving picture of the housing market, which is in the midst of its worst downturn since the Great Depression and is both the source and a major casualty of the world credit crisis.

An improvement could portend a turnaround for the world's largest economy and help stanch losses at US banks, hit hard by soured mortgage securities.

'Despite the darkening national economic outlook and the weak conditions in the housing market, some positive signs give hope that a bottom in the housing market is coming into view,' the report said.

'More than three years since the market began correcting, inventories are flattening, prices are coming back down to earth, and sales are approaching stability,' the report said. The outlook, however, assumes stronger action by US policymakers and says that even with further government intervention, the recession will keep the housing market from fully recovering until the end of this year.

With this help, sales are probably at bottom, stabilised by foreclosure sales, while construction will hit bottom in the first half of this year, although the pace of housing starts will remain very depressed until 2011.

From the peak to the trough, total single-family home sales will have declined by 40 per cent and housing starts by 70 per cent.

Mr Zandi's analysis of the impact of the US economic stimulus package has been cited by some of the Obama administration's top advisers.

The Moody's Economy.com report - titled 'Housing in Crisis: When Will Metro Markets Recover?' - says home prices in the United States will hit their nadir in the fourth quarter of 2009, with the National Standard & Poor's/Case-Shiller Home Price Index expected to show a 36.2 per cent peak-to-trough decline. The peak was reached in the first quarter of 2006.

House prices have fallen in about 70 percent of all metro areas over the past several years and although prices in most metro areas declined modestly during this period, price depreciation from peak exceeded 5 per cent in 116 metro areas and exceeded 20 percent in about 50 metro areas.


Those metro areas with the most exposure to subprime and investor lending, which consequently experienced the greatest run-up in prices during the boom, are suffering the greatest declines on the downside of the housing cycle. Punta Gorda, Florida, is one of the hardest hit US markets. Its house price declines are expected to reach a bottom in the second quarter of 2010, with a peak-to-trough decline forecast at 65.4 per cent. The peak was reached in the first quarter of 2006.

House price declines in Stockton, California, are expected to reach a nadir in the fourth quarter of 2009, with a peak-to-trough drop forecast at 67.1 per cent. The peak was reached in the first quarter of 2006.

Moody's Economy.com, based in West Chester, Pennsylvania, provides economic research and consulting services to businesses, governments and other institutions. -- REUTERS
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Subprime

Postby kennynah » Thu Feb 05, 2009 2:48 pm

just bcos the mortgage application data just showed an increased in no. of applications... some wise guy starts writing about bottoming of home prices.. hahaha...
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Re: Subprime

Postby millionairemind » Fri Feb 06, 2009 8:40 pm

TARP Shortchanged Taxpayers by $78 Billion, Watchdog Panel Says
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By Mark Pittman and Bob Ivry

Feb. 6 (Bloomberg) -- U.S. taxpayers are being shortchanged by about $78 billion through the Treasury Department’s bank bailout, the panel overseeing the program said.

The Treasury, when it was headed by Secretary Henry Paulson, received bank assets worth about $176 billion in exchange for capital purchases of $254 billion under the Troubled Asset Relief Program, the Congressional Oversight Panel said in a report today.

“The loss estimate is conservative,” said Representative Alan Grayson, a Florida Democrat on the House Financial Services Committee. “It could turn out that those assets in the end are worthless. These are massive handouts to favored institutions to try to make up with taxpayer money the mistakes they made with investor money.”
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

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