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Negotiations on a $2 million shopping center loan today were intense.

 

A refi/cash out loan.

 

Five banks are bidding for the deal.

 

We lowered our rate by a 1/4%, threw in a $250,000 free "equity line of credit" for the guy.

 

He still didn't take our proposal.

 

He's looking at an IndyMac loan, which has an even lower fixed interest rate and no yield maintenance or prepay.? Bank of America is also in the hunt, and they have turned to be very aggressive.

 

I doubt we'll get it, after working on it for 48 hours straight.

 

Lending market is going full blast right now, lenders are desperate to book loans.

 

In the meantime, our portfolio continues to shrink as good quality loans are leaving our bank and going over to the IndyMac's of the world.

 

Its a game of sheer survival.

 

Our CEO is "desperate for yield", willing to throw anything and everything on the books that is half decent.

 

If he can't find new loans, then he's forced to the Agency or Mortgage-Backed markets in the "hunt for yield".

 

Banks like us are among those who are chasing Structured Exotica.? We are flush with cash and deposits, and so is every other bank in town.

 

An unwavering lust for "earning assets" everywhere.

 

Whatever weakness that is occurring in stocks recently hasn't stopped the banks from "reaching" for riskier deals.

 

Isnt weakness in the stock markets the very element corraling the very liquid crazies to seek and find High Yields unavailable elsewhere????--

 

beardrech :ph34r: :ph34r: Parents are alarmed at computer games simulating hi crimes and lo misdemeanors;an adequate substitute would be a joy-sticked replica of a game called strip-mall-fever

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Lending market is going full blast right now, lenders are desperate to book loans.

 

 

I'm currently reading the book" The Smartest Guys in the Room" - The Enron story. In their early days the emphasis was all on closing deals. The deal makers received large "monetary incentives" to close deals. It did not matter if the deals actually made the company money - it was of course assumed that they would. One of the reasons that Enron went south was their problems with the contracts losing the company large sums of money.... I wonder if this might happen again... with the desperation to close loans? :ph34r:

 

Bung

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Aftr reading a few articles I came to Some vague conclusions about the future of oil---

 

The Trannis are diverging and soon the negative correlation to oil prices will be noticed---forcing a gigantic head fake in oil prices going down--at which point a contrarianistic tidal wave will move into the gap driving it up twenty dollars or some other monstrous figure at which point real fortunes will be made by clever shorts driving it down as rapidly

 

What does this ghave to do with the price of Golden Eggs in China???

I'll tell you

 

Oil will be discovered by non-Gold-shtunks as not such a salubrious safe-haven where one can send his portfolio on an eternal vacation--but is just as volatile as everything else

 

So?????????? So sew buttons on your underwear!

 

Gold will begin its career as a Monetary element and will ascend a Jacobs ladder to....

 

beardrech :ph34r: :ph34r: Believe it or not!

====Not a word

====May a Fartwa from Ayatoola Robertson fall upon your head--

====Tart lover!

====Strumpet taster!

====Blaspheming mediocrity!

====Vile Poetaster!

====Bootlicking Spittle swallower!

====Out.Out !Fault! Fault!

====O! alright--Its Your serve--

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image.asp?track=201&guid={A3CA37F5-7729-4975-9E35-79C7B3CB62F5}

 

Fed Release:

 

http://www.federalreserve.gov/boarddocs/sp...826/default.htm

 

Remarks by Chairman Alan Greenspan

Reflections on central banking

At a symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming

August 26, 2005

 

An excerpt:

 

The steep rise in the ratio of household net worth to disposable income in the mid-1990s, after a half-century of stability, is a case in point. Although the ratio fell with the collapse of equity prices in 2000, it has rebounded noticeably over the past couple of years, reflecting the rise in the prices of equities and houses.

 

Whether the currently elevated level of the wealth-to-income ratio will be sustained in the longer run remains to be seen. But arguably, the growing stability of the world economy over the past decade may have encouraged investors to accept increasingly lower levels of compensation for risk. They are exhibiting a seeming willingness to project stability and commit over an ever more extended time horizon.

 

The lowered risk premiums--the apparent consequence of a long period of economic stability--coupled with greater productivity growth have propelled asset prices higher.5 The rising prices of stocks, bonds and, more recently, of homes, have engendered a large increase in the market value of claims which, when converted to cash, are a source of purchasing power. Financial intermediaries, of course, routinely convert capital gains in stocks, bonds, and homes into cash for businesses and households to facilitate purchase transactions.6 The conversions have been markedly facilitated by the financial innovation that has greatly reduced the cost of such transactions.

 

Thus, this vast increase in the market value of asset claims is in part the indirect result of investors accepting lower compensation for risk. Such an increase in market value is too often viewed by market participants as structural and permanent. To some extent, those higher values may be reflecting the increased flexibility and resilience of our economy. But what they perceive as newly abundant liquidity can readily disappear. Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices. This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums.

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It is so over.

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The vignette that Mark describes is characteristic of the final, desperate stage of the end of a mania.

 

That so many are unable, and/or unwilling, to see that it is over only increases the odds that it is.

 

Every so often the market works itself into a potential crash setup. Of course, they are rarely realized, but the potential for profit is so huge that it would be foolhardy not to position for it, with prudent price and time stops. If it doesn't materialize within the expected time and price window, take the loss, and when the setup shows itself again, try again. The setup only comes along once or twice every couple of years. This may be one of those times.

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Guest libertas

Well like an idiot I just turned on Crapvision and watched Susie Orman.

 

The question was, should one wait to buy a house if you think prices are going to go down?

 

Susie's analysis:

 

$200K house. $1,200/mo. mortgage payment or $1,200/mo rent. Assume that you will buy in three years.

 

The house must go down $43,200 to compensate for the amount you have "thrown away" on rent. So buy right away because it cannot possibly go down that much.

 

---------------------------------

 

1. Apparently, there are no other expenses associated with home ownership in Susie's world. No taxes. No maintenance. No insurance.

 

2. Apparently money spent on interest is not the same as money spent on rent. (Actually, it isn't becuase of tax benefits). But Susie ignored interest cost as far as I could tell.

 

Completely bizarre.

 

 

The mind boggles. This is unbelievable.

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To help victims of Suezee's bad advice.........

(warning: close your eyes before scrolling down if you've eaten within last hour)

 

Useful info for RE maSS hysteria BagHolders

 

Q: WHAT HAPPENS WHEN I MISS MY MORTGAGE PAYMENTS?

 

Foreclosure may occur. This is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house.

 

Q: WHAT SHOULD I DO?

 

1. DO NOT IGNORE THE LETTERS FROM YOUR LENDER.

 

 

:blink:

post-257-1125104311_thumb.jpg

post-257-1125104542_thumb.gif

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Well like an idiot I just turned on Crapvision and watched Susie Orman.

 

The question was, should one wait to buy a house if you think prices are going to go down?

 

Susie's analysis:

 

$200K house. $1,200/mo. mortgage payment or $1,200/mo rent. Assume that you will buy in three years.

 

The house must go down $43,200 to compensate for the amount you have "thrown away" on rent. So buy right away because it cannot possibly go down that much.

 

---------------------------------

 

1. Apparently, there are no other expenses associated with home ownership in Susie's world. No taxes. No maintenance. No insurance.

 

2. Apparently money spent on interest is not the same as money spent on rent. (Actually, it isn't becuase of tax benefits). But Susie ignored interest cost as far as I could tell.

 

Completely bizarre.

 

 

The mind boggles. This is unbelievable.

 

Rents and mortgage payments haven't been equivalent in the Bay Area since about 1976. If they got within 20% again like from 92-98, I'd buy here. Right now my rent is about 35-40% of cost of owning. So I rent.

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Guest libertas
Rents and mortgage payments haven't been equivalent in the Bay Area since about 1976. If they got within 20% again like from 92-98, I'd buy here. Right now my rent is about 35-40% of cost of owning. So I rent.

 

Well I know that too. I didn't even get into that because that is a judgmental question. Someone in Suzie's position should at least have the accounting straight.

 

I rent too - a $650-700K condo for $2,000 a month.

 

I can do the numbers.

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Rents and mortgage payments haven't been equivalent in the Bay Area since about 1976. If they got within 20% again like from 92-98, I'd buy here. Right now my rent is about 35-40% of cost of owning. So I rent.

 

Well I know that too. I didn't even get into that because that is a judgmental question. Someone in Suzie's position should at least have the accounting straight.

 

I rent too - a $650-700K condo for $2,000 a month.

 

I can do the numbers.

Renting is cheaper only because the homeowner can't depreciate his/her asset for a tax benefit, as can most landlords. In the setting of appreciating property values, this amounts to a government subsidy of rents, as it enables the scumbag property owner to charge a lower rent than would otherwise be profitable without the write-off. This greatly magnifies the own vs. rent ratio in areas with explosive RE markets, such as SoCal and The Bay.

 

Although not, in the final analysis, unfair (the landlord may be the owner of a non-depreciable home elsewhere), the asymmetry of depreciation schedules (increasingly front-loaded) vs. low interest mortages (increasingly back-loaded ARMs) allows the landlord to further decrease front end expenses, enabling even cheaper "teaser" rents.

 

When this play reverses (ARMs interest rates rise and front-end depreciation benefits expire), rent rates will skyrocket at just the time when more renters appear on the market, via foreclosures. And, should the government decide to adjust RE depreciation schedules on a mark-to-market basis, as property values decline, the depreciation benefit could drop even further.

 

The set-up is for higher rents in the face of increasing foreclosures and higher rental demand. I think The Bay and The Apple saw the result of this in the '70's: they called it rent control.

 

At which point the rent vs. own ratio becomes meaningless, as it should be. It is an apples and oranges argument, IMHO.

 

 

and, echoing Doc's thoughts when I read Mark's post above...

 

 

it is SO over.

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image.asp?track=201&guid={A3CA37F5-7729-4975-9E35-79C7B3CB62F5}

 

Fed Release:

 

http://www.federalreserve.gov/boarddocs/sp...826/default.htm

 

Remarks by Chairman Alan Greenspan

Reflections on central banking

At a symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming

August 26, 2005

 

An excerpt:

 

The steep rise in the ratio of household net worth to disposable income in the mid-1990s, after a half-century of stability, is a case in point. Although the ratio fell with the collapse of equity prices in 2000, it has rebounded noticeably over the past couple of years, reflecting the rise in the prices of equities and houses.

 

Whether the currently elevated level of the wealth-to-income ratio will be sustained in the longer run remains to be seen. But arguably, the growing stability of the world economy over the past decade may have encouraged investors to accept increasingly lower levels of compensation for risk. They are exhibiting a seeming willingness to project stability and commit over an ever more extended time horizon.

 

The lowered risk premiums--the apparent consequence of a long period of economic stability--coupled with greater productivity growth have propelled asset prices higher.5 The rising prices of stocks, bonds and, more recently, of homes, have engendered a large increase in the market value of claims which, when converted to cash, are a source of purchasing power. Financial intermediaries, of course, routinely convert capital gains in stocks, bonds, and homes into cash for businesses and households to facilitate purchase transactions.6 The conversions have been markedly facilitated by the financial innovation that has greatly reduced the cost of such transactions.

 

Thus, this vast increase in the market value of asset claims is in part the indirect result of investors accepting lower compensation for risk. Such an increase in market value is too often viewed by market participants as structural and permanent. To some extent, those higher values may be reflecting the increased flexibility and resilience of our economy. But what they perceive as newly abundant liquidity can readily disappear. Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices. This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums.

 

 

This is such an abomination;an example of such verbal duplicity,a farragoe of Rhetorical diversionary moves, that it would require the efforts of a critical Hercules to do it complete justice.

 

"Stable ten years, indeed":as if an estimated 40 trillion dollar loss between 2000 and 2002 was nothing more than a minor discord in an economic symphony--

 

And nary a reference,a self-reference if you will, to the grey eminence himself,the enabler of all of this feverish risk taking--and the union of stocks and houses under the same genus,thus resulting in dangerous ambiguities from his clever absenting of a clarifying speciation covering the radical differences in risk between house and equity:this; so disgusting--clear to the powers,the wall street Clairvoyants,clear to them yes; but by being semantically joined at the hip totally obsure to the sheeple --

 

They, and, them and it, and everything else within his universe,all referred to in the third person, as if it were all happening to him,an innocent spectator,a mere bystander watching passivly, as if he just happened to have walked into the naborhood---"And all of a sudden the sky opened up, and it began to rain shit for seven days"; and so, " turning my back on them I ran away from these evil doers "

 

This implicitly self-exculpating snake-charming reptile manifests the worst form of behaviour--the false humility--the "decent reticence .an hippocracy;his circomlocutions round lies"; a sheep in sheep's clothing accepting all of the honorific titles of power and none of the responsibilities--

 

beardrech :ph34r: :ph34r: No, dear minister of the Stable of Fables,in fine,you're not ambiguous in the least, but rather most tranparently and reprehensibly mendacious ---In recognition of your printo-maniacal zeal, May the sign of Cain be Printed on your forehead--in G*d's name; be gone already!!!!

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