Not being able to afford a house doesn't mean you're poor. Thousands of morons with decent jobs stepped into $400K houses with adjustable rate mortgages and no money down. When the monthly payment went to $3200 they walked away or are being foreclosed upon. Who do you blame for that?
It's about personal responsibility of ALL involved. Politicians will NEVER EVER say this but, a big part of the housing problem is the homeowners themselves. But, do you think someone running for office is going to say, "the Wall Street CEO who took a big bonus before his company failed is just as guilty as the homeowner who took out a 100% mortgage and then stopped paying his mortgage and walked away from his house leaving banks and taxpayers holding the bag"? It's the homeowner who bought much more crap than he can afford who becomes the hypocrite when he yells about governments overspending and banks that took on too much risk and now need a bailout.
Last edited by jetstream23; 10-11-2008 at 07:53 AM.
im predicting a quiet Saturday on the us markets
I bought 3 houses during this market and almost bought another, on every single one of them i had the realtor and several mortgage brokers trying to convince me to take neg-am on interest only loans. 1 time I even went for it, and my payment went from 1350 a month to over 2700 a month on my option-arm within 2 years. I took it because I figured I'd want to move after a few years when the family grew, but even considering that it was a mistake, just one that didn't cost me too much cause I was able to get out of the loan after 2.5 years..
Yea, it's the fault of the home buyers for believing these guys, but don't diminish the systemic scam that was being perpetrated here. It's hard not to take advantage of these programs when it's being sold as a win/win by everyone you speak to.
I'm no economist by an measure...but I have been in thousands of homes and met and dealt with thousand of homeowners. I have seen houses get built, get sold, get renovated and get resold again. And I tell you...save for a few, none of them were first time buyers. They were people who trying to shove their hand in the money jar with half a bizzilion other people. I worked in 100+ home development comprised entirely of $700,000+ homes. People whose entire life was financed by credit and money they didn't have.
The first time home buyers Republicans love to blame so much bought houses from THOSE people. They bought the raised ranches and cape cods. They weren't buying the McMansions...the particle board and vinyl siding sh*tholes that are shoehorned together on small parcels of land left around after the 80's and 90's housing booms.
Look at these stupid places I worked at: http://www.gdc-homes.com/comm_model_detail_10_53.htm
It says the sell for $539,900 - $619,900. Well, that's funny. When I was there 2 years ago, they were selling for $700,000 - $800,000. In fact, I remember one unit was bought before it was done being built...and then resold for a profit when it was finally finished. And these places ARE CRAPPY AS HELL. The property is a triangle shaped lot located between an exit ramp for Route 9, the AMTRAK tracks and a service street for Vassar hospital. Freaking nuts...
The real fault here is these sh*tholes were never worth what they were selling for. The sum of their parts did not equal their value. The market has lost money?? Noooo...the money never actually existed to begin with...it was all a fantasy.
Asian markets getting HAMMERED... the Nikkei is down nearly 10% already
that being said, most consider the Asian markets to lag the US ones, but every Monday it's not all lag as US and Euro investors get an early start to the week as well as the lag having it's affect
The Mother Of All Credit Contractions
By Colin Twiggs
October 11, 3:30 a.m. ET (6:30 p.m. AET)
Coordinated government efforts have failed to restore calm to financial markets and we now face the mother of all credit contractions. Yields are falling as investors flee to the safety of short-term treasurys — and NYFR-OIS 1-month spread has reached a record 3.50 percent, signaling that financial markets remain choked. The New York Funds Rate (NYFR) is a new, independently measured, alternative to LIBOR.
Markets are being driven by margin calls and investor withdrawals from investment funds and hedge funds. This is a negative self-reinforcing cycle. In much the same way as an accelerating up-trend inevitably leads to a blow-off, this accelerating down-trend will inevitably reverse. The difficulty is predicting when.
Self-reinforcing cycles, or exponential trends, are often evident in nature — not just the stock market. They all eventually fail when they use up their fuel source. Brushfires will flare from a small flame into a raging inferno within a few hours, especially if fanned by a favourable wind. But they always burn themselves out. Either when they run out of fuel or the wind changes. The same occurs in the stock market. An accelerating up-trend will blow-off when the rising number of profit-takers exceeds the diminishing number of new buyers. Like a giant Ponzi scheme, it eventually has to end. There is never an unlimited number of buyers. In the same way an accelerating down-trend is constrained by the limited number of sellers. As stocks move from weak hands to strong hands selling pressure will exhaust itself. Weak hands are typically leveraged buyers responding to margin calls and Johnny-come-latelys who bought near the top of the cycle. Strong hands are bargain hunters, prepared to buy stocks at fire sale prices and hold them until normality returns. Judging from the unprecedented degree of leverage in the markets, the current sell-off may take longer than usual, but will eventually stabilize.
The role of government and central banks is to limit the long-term damage. They should not try to stem the wave of selling, which would simply overwhelm them, but they must take steps to limit the number of casualties. Back-up and bailout is the order of the day. Provision of preferred share funding to major banks and corporates, such as General Motors, is essential. Terms similar to Warren Buffett's deals with GE and Goldman Sachs, including conversion options, should ensure that taxpayers are rewarded for the risks being taken. Again, actions have to be early and decisive. If regulators wait until the storm threatens, it will be too late.
Guaranteeing bank deposits is essential, but calls to underwrite all bank debt seem unnecessary. The Fed interposing itself as intermediary between lenders and borrowers in the inter-bank market should achieve the same ends.
I was interested to read speculation about who should be the next Treasury Secretary. Candidates proposed were Warren Buffet, John Thain, Paul Volcker, Charles Summers and a host of eminent economists. To me there is only one rational choice: Henry Paulson. Given the circumstances I believe he has done well. And what the markets need now is consistency. You don't change horses mid-stream. I have read members of Congress questioning his integrity and accusations that he is "looking after his mates in Wall Street". While it would be natural to feel some loyalty to GS, the rest of Wall Street were his competitors, not his "mates", and I believe he has demonstrated overriding loyalty to his client: the taxpayer.
The blame game has started. It is human nature to seek a scapegoat when things are going badly. We must have our Jonah to cast overboard in the hope that this will calm the waters. The press are offering up Alan Greenspan and I dare say he shoulders some degree of responsibility. But this crisis is much bigger than a single individual. The entire system is at fault. There are millions of actors who have played their part, most of them unwittingly, including AG. In his defense, he expressed concern over the massive leverage of GSEs Fannie Mae and Freddie Mac in early 2004, but attempts to curb this were blocked by Congress.
Gold & Crude Oil
Spot gold displays a bullish descending broadening wedge formation, but this is countered by Twiggs Money Flow (13-week) which signals continued selling pressure on IAU. In the short term, breakout above $910 (IAU reflects 1/10th of an ounce) would test the upper border, while failure of support at $820 would test the lower border — and long-term support around $700 ($710 to $690).
Crude oil broke through the band of support between $90 and $87 per barrel — and is headed for the next band, between $70 and $68. Failure would test the 2007 low of $52/barrel.
Concentrate mostly on long term charts. Short-term support and resistance are easily swamped in times of extraordinary volatility.
Dow Jones Industrial Average
Friday's long tail and strong volume signal buying support at 8000. Judging by the market's recent behavior, reacting negatively to news of rescue efforts and sweeping aside support levels, it remains doubtful whether this too will hold.
Long Term: Failure of support at 8000, or respect of the new resistance level at 10000, would warn of another down-swing. Expect strong buying support between 7000 and 7200, the low of the 2002 bear market. Fibonacci followers will recognize this as the 50 percent retracement level. Twiggs Money Flow (13-week) is tracking downwards. Be cautious of a bullish TMF divergence if it accompanies a V-bottom on the price chart.
Looking further into the past, the point and figure chart below shows the entire history of the Dow since 1929. There have been seven 50 percent retracements in the last 80 years: the first was the crash of 1929; the next four occurred during the Great Depression which followed; the sixth occurred during the great stagflation of the 1960s and 1970s; and we are now experiencing the seventh. We can learn two things from this. Firstly,  to  shows that busts do not always occur as single events. Secondly, that major busts tend to result from failures of financial/monetary policy. I believe that we should be able to avoid another depression (like  to ), but can expect a lengthy period of stagflation, or even deflation, during this massive credit contraction.
The S&P 500 is testing support at 800 (intra-day). This is also effectively a 50 percent retracement from the 2007 peak. Expect strong buying at this level.
Fedex, UPS and the Transport Average show strong primary down-trends, indicating a further slow-down in the broader economy.
The Nasdaq 100 broke through the major band of support between 1400 and 1300 before finding short-term support at 1200 (intra-day). If 1200 fails, or retracement respects the new resistance level at 1300, expect a test of 1000. Twiggs Money Flow (13-week) signals continued selling pressure.
The TSX Composite is also in melt-down, with Twiggs Money Flow (13-week) reflecting strong selling pressure. The index is currently testing support at 9000. If that fails, the next level is relatively close, at 8000.
United Kingdom: FTSE
The FTSE 100 went through targeted support at 4300 like a dose of salts. We don't need to look at Twiggs Money Flow (13-week) to confirm there is selling pressure. Unless there is immediate reversal above 4000, we can expect a test of the 50 percent retracement level at 3400 — the 2003 low.
It is important in these times to maintain perspective and not allow our judgement to be clouded by negative emotions. Rejoice that the sky is still blue, the sun still shines, the birds still sing, the rains still fall, the crops still grow, and our children are healthy. And remember: the sky is always darkest before the dawn.
My order for Amazon filled at 52.93 even though it was a limit order for 55. My Google order did not fill at 295. Now Google is up 60 to about 370. I missed the big rally. Or did I? It still possible that the rally will be short lived. The carnage may return and my order will still be there waiting to be filled.
Well, I don't think anyone truly believed Monday's rally was sustainable.