Tuesday, March 30, 2010

April Fool's Day for the housing market?

Since Jan 1, 2009 the Federal Reserve has been buying mortgage backed securities like a bridezilla in Filene's.

But the clock is ticking and Cinderella was just seen stumbling down the staircase because the Fed will end this program as of midnight tomorrow. So far we've put $1.25 TRILLION of mortgage backed securities on our balance sheet. This is now the single largest asset held by the Fed. Let's see if Mr. Market can handle trying to operate without a giant crutch. There could still be one more little spurt in buying at the low-end of the housing market as people try to take advantage of the government one last time via the 1st time homebuyer tax credit.

We'll see.

Just wait until the powers that be get their arms around this idea from the Swiss...

"If you thought we had it bad here in Australia, think again. A Swiss driver has received the speeding ticket of the century, $312,000 (£180,000) for driving 137km/h through a village with a 80km/h speed limit.

No, he didn’t kill anyone, nor did anyone get hurt. Even his red Ferrari Testarossa was undamaged. The reason the fine is so high is because of the laws the Swiss have enacted to combat speeding.

The high speed fines are calculated based on the motorist’s wealth, in this case assessed by the court as $24m, it also didn’t help that he was a repeat offender

It's good to be doing god's work.....*

"In the latest Goldman Sachs (NYSE: GS) controversy, the gilded firm has raised brows for advising big clients to short California-issued municipal bonds, which the firm itself underwrote for the state, reports ProPublica.

The facts are not shocking really. They demonstrate the many ways a bank can generate profits.

They issued the bonds. They made markets in the bonds. But they also advised big clients to invest in credit defaults swaps on the California bonds, and made markets in those derivatives, a very lucrative endeavor."

* This references a quote from Goldman's CEO that the firm was doing god's work.

Interesting article on the exburbs going belly up....

"Vandals knocked out the streetlight in front of the Lopezes' five-bedroom home and then took advantage of the darkness to try to steal a van. Cars are parked four deep in the driveway next door, where a handful of men rent rooms. And up and down their block of handsome single-family homes are padlocked doors, orange "no trespassing signs" and broken front windows.

It wasn't what the Lopezes pictured when they agreed to pay $440,000 for their 5,000-square-foot house in 2006.

Vacant homes are sprinkled throughout Willowalk, betrayed by foot-high grass. Others are rented, including some to families that use government Section 8 vouchers to live in homes with granite countertops and vaulted ceilings.

When the development opened in 2006, buyers were drawn to the area by advertising describing it as a "gated lakeshore community." Now, many in Hemet call Willowalk the "gated ghetto," said John Occhi, a local real estate agent.There are dozens of places like Willowalk, and they are turning into America's newest slums, says Christopher Leinberger, a visiting fellow at the Brookings Institution. With home values at a fraction of their peak, he said, it no longer makes sense to live so far from the commercial centers where jobs are concentrated.

"We built too much of the wrong product in the wrong locations," Leinberger said."


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