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Monday, June 23, 2008

Housing/Subprime/Credit Roundup — June 23, 2008

Items of Interest:

Financial Tsunami Ahead -- I have often, in private, compared the financial mess hitting the U.S. to a rare tsunami hitting a lonely shore where someone is standing, armed only with a small bucket to try to stop it.

In the case of financials, the initial problem or underwater earthquake could be the undermining of a multi-decade credit build-up across most of the U.S. economy and the esoteric instruments that go along with the debt....

The Interest Rate Problem...

The real issue is that foreign investors own the U.S. Period. They now own 56% of all of the U.S.' marketable Treasuries. What if they decided to say, "Sell, Mortimer, sell"? ...

Foreign owners of US Treasuries----
Charles Steele / Washington Post:
The Color Of Credit -- The subprime mortgage fiasco is sending tremors through Wall Street and has brought the U.S. economy near (if not into) recession. For African Americans and Latinos -- the primary victims of the debacle -- the mortgage meltdown may widen the considerable gap in wealth that already exists between whites and people of color. Even worse, some proposals to fix the problem of limited access to credit may end up doing more harm than good.

"We estimate the total loss of wealth for people of color to be between $164 billion and $213 billion for subprime loans taken during the past eight years. We believe this represents the greatest loss of wealth for people of color in modern U.S. history," the Boston-based organization United for a Fair Economy noted in its report "Foreclosed: State of the Dream 2008." ...
Shaq O'Neal wants to help homeowners facing foreclosureOrlando Sentinel:
Shaq: I can help homeowners fight off foreclosure -- Shaquille O'Neal says he wants to build a legacy -- literally -- in Orlando.

The NBA star said he is working on plans for real-estate-development projects in Orlando, with an eye toward helping those who are facing foreclosure on their homes.

"I want to come in not to kick them out, but to work with them and save them so they can stay in their homes," O'Neal told the Orlando Sentinel during an impromptu stop Tuesday at Orlando City Hall.

Attorney Mark NeJame, who arranged the visit along with longtime friend and Realtor Curtis Cooper, said the star center wants to buy the mortgages of homeowners who have slipped into foreclosure because of high interest rates. He would sell the homes back to those troubled buyers with more affordable terms, hoping to make a small profit.

"He's become a businessman with a conscience," NeJame said, adding that Shaq might also develop an affordable-housing project...

Orlando Sentinel:
Kazaam! Can Shaq tame mortgage genie?

Wall Street Journal Blogs:
Shaquille O’Neal: Wants to Save Delinquent Homeowners

Shaq where you at?
Seeking Alpha:
Homebuilder Forecasts and Expectations -- Quote of the Day
"At the current stock price of $1.69, he has a bit of a loss, but at least he could have control over the assets until some value could be recovered down the road when the Florida real estate market begins to improve." - Gimme Credit analyst Vicki Bryan on the news that major shareholder Carl Icahn is in talks with homebuilder WCI Communities for some sort of transaction. Bryan estimates that Icahn built his equity stake in WCI at approximately $18-$20/share. (Forbes, June 20th)...
NY Times:
Banks Trimming Limits for Many on Credit Cards -- The easy money that led Americans to depend on credit cards to pay their bills is starting to dry up.

After fostering the explosive growth of consumer debt in recent years, financial companies are reducing the credit limits on cards held by millions of Americans, often without warning.

Banks that issue cards like Visa and MasterCard, as well as the American Express Company, are cutting the limits for customers who have run up big debts, live in areas that have been hit hard by the housing crisis or work for themselves in troubled industries...

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