Tuesday, February 10, 2009

Where the foreclosures are

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Posted by at 8:31 AM
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23 comments:

  1. AnonymousFebruary 10, 2009 8:40 AM

    Suzi Ortman said on Good Morning America this morning... that the bail out needs to pay off the homeowner who paid too much for thier houses " thru no fault of thier own".

    Its not thier fault they paid too much for thier home! Its not thier fault they over bid! Its not thier fault they were getting into the game! Its not thier fault they have an 80/15/5!

    Dear Suzi, just whos fault is it?

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  2. AnonymousFebruary 10, 2009 8:44 AM

    "homeowner" is an oxymoron when talking about people who have an ARMS loan on an underwater house.

    Anyway what do you expect Suzi to say? She has to cater to fans or people wont watch her. Dont listen to talking heads on tv....they talk for ratings and sensation, not for truth or what you need to hear.

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  3. AnonymousFebruary 10, 2009 12:43 PM

    People who bought houses and took out a mortgage took a chance on America. It's only fair now that America looks out for them!

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  4. AnonymousFebruary 10, 2009 1:00 PM

    I have a proposal...

    Homeowners who received suicide loans should be reimbursed by the federal government.

    That is to say they should get 100% of their down-payment back.

    Since we all know these people weren't putting down any money anyways this play would cost approximately $2.95.


    It is pathetic how all these people are crying about losing "their" homes when they never had any equity to begin with.

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  5. LanceFebruary 10, 2009 2:32 PM

    This comment has been removed by the author.

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  6. AnonymousFebruary 10, 2009 2:35 PM

    Rents haven't gone up nearly as much as mortgage payments. A way out of this would be to put a tax on rents. Something like 20%. Then that money could be used to help out those who can't afford their mortgage. That would make things way fairer. Why should homeowners be paying that much more than renters?

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  7. LanceFebruary 10, 2009 3:11 PM

    Anon 11:35,

    With Obama in power, such a move wouldn't surprise me. Things have never been "fair", but they're about to get a lot less "fair" IMHO.

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  8. AnonymousFebruary 10, 2009 5:01 PM

    Losing your house? Blame the bankers, not your fellow citizens. We were cautious, we drive old, embarrasing cars and bought a house that was well within our means.

    We did not go to Disney World, we never had cable or satellite. We don't have a big screen TV. We never had text messaging on our cell phone. We watched neighbors and relatives splurged on every stupid luxury put in front of them and we abstained, now you want us help you out? Why the heck should we be taxed to bail out anybody????

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  9. UnknownFebruary 10, 2009 5:46 PM

    Anon 02:01:

    Yeah, I hear you. But the other side of it is that all of this irresponsibility is causing a lot of other people to lose their jobs. Many of those may well have been perfectly responsible, in fact.

    While I am not wild about bailing out irresponsibility, I am not wild about croaking the economy either.

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  10. AnonymousFebruary 10, 2009 6:12 PM

    "Jack Russell said...

    While I am not wild about bailing out irresponsibility, I am not wild about croaking the economy either."

    My sentiments exactly, the great thing about "the bubble" was that it rewarded the patient renters, and punished only the irresponsible buyers.

    The bubble is now gone, and now we have "the recession". The recession hurts all parties, renters, owners, responsible, irresponsible - really everyone with a job.

    If I had my way, "the bubble" would be longer and "the recession" would either be short, or never have occurred. I want lower home prices, but not at the expense of my job!

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  11. AnonymousFebruary 10, 2009 7:45 PM

    if you are losing a job, then society has deemed your job unneccesary at the current time. Creating jobs without a true need is a sham. If you lose your job, then you need to improvise and overcome. NO BAILOUTS, PERIOD.

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  12. AnonymousFebruary 10, 2009 10:31 PM

    After ridiculing attempts warning him that subprime lending regulation was necessary, Barney Frank dismissed all common sense (can be seen on you tube). With plenty of help from Acorn, banks were leaned on to make these catastrophic loans. Acorn does Not deserve the 4.5 BILLION allocated to them in the "stimulus" package. Nor does anyone who doesn't create jobs directly to American (Not illegal) workers.

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  13. AnonymousFebruary 10, 2009 10:36 PM

    "Anonymous said...
    if you are losing a job, then society has deemed your job unneccesary at the current time. Creating jobs without a true need is a sham. If you lose your job, then you need to improvise and overcome. NO BAILOUTS, PERIOD."

    My such a confident post. What then about those workers involved in high technology. Suppose, their employer has a very illiquid position, and cash flows poorly.

    Suppose too, the employer needs a revolving line of say 50MM to pay inventory and payroll til the next 300MM payment comes in 12-18months from now.

    Suppose too that despite numerous personal guarantees, factoring, memeoing, collateral pledges, etc. etc. etc, the employer still cannot get a revolver - simply because they cannot sell his chattel paper on the secondary market.

    This is not uncommon - it happens all the time - it is wrecking our economy.

    This has nothing to do with construction, homebuilding, auto manufacturing, or other job (which I agree with you) has no true need.

    Can you think of a way out of this absent a bailout. Unfortunately I cannot. Therefore, in lieu of returning to the 1950s era of credit only for the largest (blue chip), most rigid and uncreative industries out there - I say YES BAILOUT....

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  14. AnonymousFebruary 11, 2009 2:00 PM

    Still disagree. Credit shold go to those who have sound balance sheets, not the overleveraged and those who took excessive risk and failed. The success stories will be those who are truly creative, and can provide a product or service that is truly necessary, as deemd by the customers. I don't believe in bailing out the losers. I believe in the government providing security and education, and help for the handicapped. No gravy train otherwise.

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  15. AnonymousFebruary 11, 2009 2:23 PM

    "Credit shold go to those who have sound balance sheets, not the overleveraged and those who took excessive risk and failed."

    You still dont understand. Suppose you have 500MM in fixed assets and want a revolver to the tune of 50MM. The balance sheet here shows a 90% equity position - its hard to get any more sound than this...

    The problem is still liquidity. The bank has its stupid proformas which assumes certain coverage ratios that cant be met. VC funds used to step in and bridge the gap - or mezaninne financing was available - both of those are running scared - right now there is no other option.

    Dont get me wrong, I am a dyed in the wool libererian - ideally govt should only be involved in defense, weights & measures, transportation (maybe), & education (maybe) but thats it.

    However, I have no abandoned all principles because I see stuff like this happening that simply should not. Eventually it will turn around, but at what cost? 10 years of no innovation? 10 years of no medical breakthroughs? 10 years without any advancement in industries totally dependent upon the free flow of credit? Sorry thats just too high a price to pay...

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  16. UnknownFebruary 11, 2009 4:49 PM

    Its funny to see people like Anonymous at 2:23 slap down fools spouting talking points and cliches with actual real knowledge.
    Cliche:Credit shold go to those who have sound balance sheets, not the overleveraged and those who took excessive risk and failed. .
    Knowledge:Suppose you have 500MM in fixed assets and want a revolver to the tune of 50MM. The balance sheet here shows a 90% equity position - its hard to get any more sound than this...

    The problem is still liquidity. The bank has its stupid proformas which assumes certain coverage ratios that cant be met. VC funds used to step in and bridge the gap - or mezaninne financing was available - both of those are running scared - right now there is no other option.

    Unfortunately most people are stuck in cliche land. Its actually refreshing to hear someone who describes themselves as a libertarian who isn't too idealogically rigid to recognize that sometimes government intervention is required.

    As Joseph Stiglitz said:"Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well. Some of the important instances have been long understood—environmental externalities. Markets, by themselves, will produce too much pollution. Markets, by themselves, will also produce too little basic research. (Remember, the government was responsible for financing most of the important scientific breakthroughs, including the internet and the first telegraph line, and most of the advances in bio-tech.)
    But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always.
    Government plays an important role in banking and securities regulation, and a host of other areas: some regulation is required to make markets work. Government is needed, almost all would agree, at a minimum to enforce contracts and property rights.
    The real debate today is about finding the right balance between the market and government (and the third “sector”—non-governmental non-profit organizations.) Both are needed. They can each complement each other. This balance will differ from time to time and place to place. [5]"

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  17. LanceFebruary 11, 2009 6:32 PM

    Anon 2:23,

    I see your point, but perhaps this is a lesson that companies should hold enough liquid assets to be able to meet their current obligations as they become due. Too many companies have been playing the finance game for too long. Those individuals who live off of revolving credit (i.e., living worse than 'paycheck to paycheck) will likely find themselves in trouble during this recession ... And I don't see why companies shouldn't likewise find themselves in trouble if because of greed, they have invested all their assests in such a manner that they have forced themselves into a position of having to use other peoples' money to meet their current obligations.

    If their balance sheets are as strong as those in your example, they'll easily solve their problem by selling themselves to companies who haven't been as greedy ... and have the real liquidity to meet not only their current obligations ... but those of those companies that don't. And the end result will be better companies (i.e. better management) surviving. I think this is one instance where you should be sticking to your libertarian instincts.

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  18. AnonymousFebruary 11, 2009 7:10 PM

    "but perhaps this is a lesson that companies should hold enough liquid assets to be able to meet their current obligations as they become due."

    Thats whats happening. It will reduce the world of R&D by 90% - only those with the most liquity will survive.

    Unfortunately, it will kill 80-85% of them who otherwise would make it just fine...Remember, for every innovation in medicine or technology, there are probably 99 that fail. What you are proposing is reduce the total output of successful innovation by probably about 90% - I dont see how that is good for anybody.

    "If their balance sheets are as strong as those in your example, they'll easily solve their problem by selling themselves to companies"

    Like I said, VC isnt there to pick up the slack. They are too busy covering their arses for possible redemptions - meaning very few of them have 1/2 a billion lying around to pick up a company on the cheap. Any other suggestions?

    Incidentally, your pervasive use of the word "greed" shows you dont understand the issue at play here. The companies I am talking about are the model of fiscal responsibility - they have ZERO debt other than their revolver and the DTE ratios are the envy of nearly every other business out there - please explain to me where exactly GREED plays into this?

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  19. AnonymousFebruary 12, 2009 1:32 AM

    "I see your point, but perhaps this is a lesson that companies should hold enough liquid assets to be able to meet their current obligations as they become due."

    Wow, I know this is the broken clock principal and all, but lance is right about something.

    There is no good reason a good profitable company should have so little cash on hand that they can't even pay a couple months of normal expenses without borrowing money.

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  20. AnonymousFebruary 12, 2009 1:37 AM

    "Incidentally, your pervasive use of the word "greed" shows you dont understand the issue at play here. The companies I am talking about are the model of fiscal responsibility - they have ZERO debt other than their revolver and the DTE ratios are the envy of nearly every other business out there - please explain to me where exactly GREED plays into this?"

    I wouldn't say "greed" so much as "stupidity."

    These companies got used to the idea that cheap easy credit was always available, so they starting asking themselves why they bothered to keep a cash reserve on hand.(When they could try to put that money somewhere else that would generate a greater return.)

    Well, now they are finding out that credit is not always cheap and easily available, and that is one reason why you need to maintain a safety net.

    The same thing is happening to many individuals who have gotten used to the idea of having a home equity line of credit available should any major expense present itself unexpectedly. With those loans being scaled back or frozen, many people are going to be placed in an difficult situation when their air conditioner suddenly craps out this July.

    A cash safety net is a fundamental part of good financial planning, for both businesses and individuals.

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  21. AnonymousFebruary 12, 2009 11:20 AM

    The problem we now have a high volume, low reciepts business.



    If operating expenses are millions of dollars per month, and can swing wildly per month (such that it is nearly impossible for any company to have that much cash on hand), how do you plan to operate?

    The answer is - you dont.

    The ones that will survive are the biggies - the Mercks, the Microsofts - those that do have huge wads of cash laying around and can self finance.

    Lets say however, you have a product, you believe in it, but you have only a million dollars in net worth, and its going to take 30 Million dollars to develop it, and a working capital line of about 5 million to pay salaries and inventory as necessary.

    For starters, you pledge EVERYTHING you have to the bank - all your cash, your home, etc. If you fail, ALL of it goes to the bank. You are totally exposed (personally) but still 29 million dollars short of getting this going. If the bank STILL says no, if VC or other private equity is too busy dealing with redemptions, how do you get your innovation going?

    The answer is, you dont, meaning no innovation, no advancement, and really nothing happens - often to the detriment of society.

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  22. AnonymousFebruary 13, 2009 8:04 PM

    the above diatribe is junk. Of course innovation and advancement will be less common in a recession. DUH! The point is, the ones that will survive a recession will be the ones that, during "boom" times, were truly useful. Recession is the time to cleanse our system of junk. Unfortunately, our gov't is trying to avoid this pain, and allow such incredible innovations as all the crud made in China to continue on...AS I have said in above posts, jobs deemed non-useful by the market forces need to go away. It is time to clean house. Companies who are overleveraged need to fail. True innovation will then have the path cleared for success.

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  23. AnonymousFebruary 14, 2009 12:19 AM

    Agree anon the top 6 industries being hammered by this recession:

    High technology - Junk
    Homebuilding - Junk
    Clean energy - Junk
    Financial services - Junk
    Medical advancements - Junk
    Auto Manufacturing - Junk

    Personally, I think 3 of these should die - the other 3 should not. I guess thats just me.

    The market has spoken - purge it all!

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