left right politics showbiz tech invest good life gossip fun hot
Mother Jones Hot Air Huffpo Variety Engadget Seeking Alpha Lifehacker TheSuperficial Daily Beast reddit
Daily Kos Michelle Malkin Politico Billboard Boing Boing TheBigPicture Luxist TMZ.com Fark BuzzFeed
ThinkProgress RightWingNews First Read CNN Showbiz Gizmodo FT Alphaville Joystiq Perez Hilton 4chan memorandum
Crooks+Liars Power Line CNN ticker E! Online Techcrunch Josh Brown Kotaku gamer Bastardly Post Secret Techmeme
TalkngPtsMemo Ameri..Thinker Swampland TV Guide Ars Technica 24/7 Wall St. TreeHugger Egotastic hascheezburgr Drudge
The Raw Story NewsBusters The Caucus Ent. News Mashable bloggingstocks Consumerist PinkIsTheNew dooce digg
Wonkette Wizbang fishbowlDC HlywdWiretap Google blog DealBook lifehack.org CelebrityBaby Someth'nAwful trends
Atrios Taki Magazine WashWhisprs DeadlnHllywd Read/Write Jeff Matthews 43folders GoFugYourself Neatorama PSFK
Firedoglake Big Hollywood The Fix MSN Ent. OReilly Radar PhilsStockWorld Autoblog Page Six Cool Hunter BBC
Young Turks IMAO Capital Gains Rot'nTomatoes GigaOM Daily Rec'ng Deadspin BestWeekEver stereogum Timespop
Americablog AceOfSpades Open Secrets Cinematical ProBlogger Zero Hedge DownloadSqd Dlisted CuteOverload media eye
Politicususa Redstate WikiLeaks law Cool Tools Bespoke MediaZone PopSugar Dilbert blog TVNewser
CounterPunch Jawa Report econ law.alltop Scobleizer BtwTheHedges Deviant ArtHollyw'dTuna gapingvoid BuzzMachine
TalkLeft Patterico EconLog Volokh Consp. Apple Blog Minyanville Gothamist x17online DailyGrail MediaGazer
Feministing Townhall.com Freakonomics Legal Insurrec.. Valleywag Fast Money Curbed DailyBlabber Prof. Hex Steve Rubel
PolitAnimal OutsideBeltwy CrookedTimbr Conglomerate mozillaZine RealClearMkts FabSugar Gawker OvrheardinNY MediaBlgNRO
Truthdig Moonbattery MarginalRevo SportsLawBlog Smashing W$J Mktbeat Gridskipper Radar Last.fm Threat Level
Alternet RealClearPoli crime W$J Law BlogTechdirt AbnormalRtrns Material Defamer kottke.org Seth's blog
Media Matters Instapundit CrimeblogsBalkinizationMAKE RandomRoger Sartorialist Jossip PumpkinChuckin mediamatters
The Nation Hugh Hewitt All Crime Credit Slips SrchEngLand Stock Advisors Drink'nMadeEasy Just Jared Maps Mania Newshounds
Maddow Blog PJ Media Smoking Gun FindLaw VentureBeat Slope of Hope Mark Cuban Celebitchy CollegeHumor FAIR

Friday, May 30, 2008

Housing/Subprime/Credit Roundup — May 30, 2008

Items of Interest:

US Bank failures per yearMike Mish Shedlock /Minyanville.com:
S&L Crisis Vs. Current Crisis -- Current problem smaller but more pervasive.

I've been talking about an expected wave of bank failures for quite some time, most recently in Too Late To Stop Bank Failures. Recently I was asked to compare the current crisis to the 1980's S&L crisis in regards to whether or not this crisis will be worse.

By sheer number of failures, the S&L crisis will dwarf what's coming hands down. Here is a chart from MarketWatch that tells the story...

The Big Picture:
April New Home Sales - Revisited -- On Tuesday, we noted that New Home Sales fell 42%. There was one small piece of the data I failed to mention earlier in the week, which is worth discussing -- the March revisions:
1) Revisions: April's (unrevised) data for new homes was 526k annualized units (+3.3). That is the identical to the number released in March -- 526k units. March sales were revised to -11% from -8.5%. So but for the revisions, March to April headlinenumber was flat.
How did we show a 3.3% monthly gain? Tuesday’s report saw March revised DOWNWARDS from 526k units to 509k units. In other words, April did not so much showed a positive move upwards (statistical error notwithstanding) as much as the prior month comparison was revised downwards...
Wall Street & Technology:
Drop in Housing Starts Indicates Unemployment Is Headed to 9% -- Where is the economy headed? Some “experts” say the economy is ready to rebound, after a short contraction. Others think that the economy is just at the beginning of a long and painful recession. However, the truth may be hidden in data that tracks housing starts, according to University of San Francisco business professor Jon Fisher, who previously founded and sold his online authentication company Bharosa to Oracle. Fisher contends the unemployment rate may be headed to 9 percent.

Fisher says that history shows that as the number of new housing starts drops, the unemployment rate rises shortly thereafter. After analyzing new housing start data, in the next 12 months, Fisher says the U.S. could see unemployment rates as high as 9 percent, a rate not seen since 1983.

“This is important data given the number of layoffs projected on Wall Street,” Fisher wrote in an email. “I think the numbers are a fraction of what we're going to see." ...

“The following chart is a plot of new U.S. housing starts (white line) and unemployment (red line) over the last 50 years. Historically, when new U.S. housing starts have plunged, unemployment has surged in the following year.”....

New Homes vs. unemployment rate----
New Overdue Home Loans Swamp Effort to Fix Mortgages in Default -- Newly delinquent mortgage borrowers outnumbered people who caught up on their overdue payments by two to one last month, a sign that nationwide efforts to help homeowners avoid default may be failing.

In April, 73,880 homeowners with privately insured mortgages fell more than 60 days late on payments, compared with 39,584 who got back on track, a report today from the Washington-based Mortgage Insurance Companies of America said...

Last month's 54 percent "cure ratio" among defaulted mortgages compares with 80 percent a year earlier and 87 percent in March. The comparison may not be valid because one lender changed the way it calculated defaults and cures reported to the insurers.
Calculated Risk:
Bloomberg's Weird Numbers -- Forgive me for once again falling into despair over the media's inability to report sensibly and critically on foreclosure and delinquency numbers. I should be immune by now. If you are wiser than I, just skip to the next post. If you still cradle to your wounded heart the battered but indomitable belief that even media outlets like Bloomberg can learn to spot the flaws in a reported statistic..

So we start with an eye-popping number, and then only at the very end do we note that this number may mean much less than meets the eye...
NY Times:
Lose Homes, Pay More Tax -- Some of the biggest losers in the real estate slump are not purchasers of mansions they could not afford. They are buyers of second homes — or third ones, for that matter — who are sitting on a tax time bomb.

Many of these people will lose their properties in foreclosure and then stagger into bankruptcy under the weight of a sizable tax bill. While Congress has granted some tax relief to people who lose their primary homes, there is no such aid for those who fall behind on payments on a getaway condo in Las Vegas, a retirement home on the Florida coast or an old house that they are renting out for income.

Bankruptcy lawyers say they are seeing a wave of foreclosures among owners of second homes in such a position, owners who thought they had found sound advice for financial security...
Wall Street Journal:
Mortgage-Broker Study Finds High Fees Charged -- The home-mortgage industry takes advantage of consumers' confusion to charge some people much higher fees than others, according to a study prepared for the Department of Housing and Urban Development.

The study by Susan Woodward, a former chief economist for HUD, also found that loans arranged by brokers typically carried higher fees than those obtained directly from lenders.

The report, released Thursday, is based on an analysis of 7,560 fixed-rate home-purchase loans completed in May and June 2001 and insured by the Federal Housing Administration, an arm of HUD.

The study says lenders typically make better offers to borrowers in neighborhoods with higher general levels of education...
NY Times:
At Bear, an Apology Is Met With Silence -- Dropping the curtain on 85 years of Wall Street history, shareholders of Bear Stearns voted Thursday to support the troubled investment bank’s controversial, government-backed merger with JPMorgan Chase.

The result, announced at a 10 a.m. meeting at Bear’s headquarters at 383 Madison Avenue, marked the end of Bear as an independent firm. But the outcome reflected less an embrace of the deal by bruised investors than the stark reality that the $10-a-share price was the best option available...

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia