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Realistbear

Ben To Take His Seat At 2 P.m. Our Time

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Just heard it on Gloomberg. Special session of the Fed to address the greatest financial and social crisis in US (world) history.

I wonder if the markets willl react? Or is it old news and not even the EAs are denying it any longer?

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Eh, I'll still wait for the "translation" on marketoracle. He never says what he means.

EDIT: Not quite as bad as Greenspan though...

Edited by agb41

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Just heard it on Gloomberg. Special session of the Fed to address the greatest financial and social crisis in US (world) history.

I wonder if the markets willl react? Or is it old news and not even the EAs are denying it any longer?

Leaked transcript:

My Fellow Americans.

You're screwed.

Yes, really screwed.

You may think I'm malking a joke to lighten up this announcement. I'm not. You're screwed.

Here's some of the people who screwed you. They are mostly not screwed. You are.

Screwed, that is.

You know that friendly mortgage broker who got you into that vast house? They screwed you. And they are screwed too, 'cause they blew all the cash on fast cars and coke.

If you've got a house with a mortgage, you are screwed. Hand the keys in now.

If you haven't got a house, you are still screwed because the economy is - to possible overuse the term - screwed.

Those of you who are especially lucky to have blood types matching those of rich chinese people may be able to make some cash from selling organs. But most of you are screwed.

You may be thinking that we in the government will now announce meaures to help you. Well, we can't. We, too, are screwed.

Thank you.

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Please, please, please.

I said sometime ago that recession was 100% certain guaranteed for this year and it looks like that is what we have folks. Recession 1st Q 2008! (Almost made it for the 4th Q 2007 with a .6% growth in GDP).

Funny that Al Greenspan only though the chances of one were 50:50. :blink:

Further IR cuts by the Fed will push oil toward $150 and the gold bugs might get in a frenzy but this makes the chances of a depression and severe deflation all the more likely sooner. Timing will be key--if you believe that bubbles always burst.

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Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in remarks prepared for a conference in Orlando, Florida. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''

Bernanke's remarks go beyond the stance of the Bush administration and previous Fed comments. By comparison, the central bank's Feb. 27 report to Congress called for lenders to ``pursue prudent loan workouts'' through means such as modifying mortgage terms and deferring payments.

Bail out the homeowners. Keep prices higher than forced sales would do. Another transfer of wealth from the homeless class to the home-owning class.

genius.

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Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in remarks prepared for a conference in Orlando, Florida. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''

Bernanke's remarks go beyond the stance of the Bush administration and previous Fed comments. By comparison, the central bank's Feb. 27 report to Congress called for lenders to ``pursue prudent loan workouts'' through means such as modifying mortgage terms and deferring payments.

Bail out the homeowners. Keep prices higher than forced sales would do. Another transfer of wealth from the homeless class to the home-owning class.

genius.

apparently, he is asking the banks to start writing off some of their homeloans to try and stem foreclosures

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Thanks chaps :)

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Representative Barney Frank of Massachusetts on Feb. 28 outlined a $15 billion plan to buy distressed mortgages from lenders, saying the ``cascade of foreclosures will continue'' without government action. Treasury Secretary Henry Paulson said such proposals ``do more harm than good.''

The tool who wanted this money-printing bailout is a Democrat! FFS :blink:

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So some lucky Americans will be getting houses for free? Why would the banks do that?

His argument is that the bank will lose less overall. It's more costly to foreclose, more foreclosures means more house price falls etc. He wants stop stem the falls.

The lucky MEWers may have had their money for nothing.

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Countrywide ($1.5 trillion in serviced loans) is down 3% already.

http://finance.yahoo.com/q?s=CFC

more from countrywide

http://www.msnbc.msn.com/id/23426159/

Activists bare teeth over foreclosures

"Their quarry, Mike Garmone — a regional vice president at Countrywide Financial Corp., the nation's largest mortgage lender — didn't answer his door. So they deployed, ringing bells at the big homes with three-car garages, handing out accusatory fliers and lambasting Garmone and his company's loans. Before departing, they left their calling card — thousands of 2 1/2-inch plastic sharks flung across Garmone's frozen flower beds, up into the gutters, littering the doorstep."

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Having just sat through one of the most boring speeches ever this is my interpretation of what HeliBen was saying.

In Q4/07 banks were losing 50% of their investment on defaulting properties. The slowdown in house prices is causing great distress to the wider economy as more people are entering NE making it impossible to refinance and creating a bigger wave of foreclosures, greater stress on local economies and further falls in house prices (a downward price spiral). As this continues banks will lose more money so what they need to do is enable refinancing at lower rates to lenders. The problem here is that many companies can't do this as the borrower is in NE so he is asking these institutions to write off amounts to bring borrowers back into PE so they can get better mortgages at better rates.

His main argument to this is as per my statement, "In Q4/07 banks were losing 50% of their investment on defaulting properties".

It's also worth noting that he said the problem wouldn't have been as bad, if bad at all, had prices (house) carried on increasing. Does this sound familiar?

HTH?

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Won't this just lead to even more losses for the banks and their stock price plummeting even further? Every option seems to be a loser.

Yes, but in theory less of a loss. By writing off 10 - 20% of the value instead of 50% they can then refi, either with the existing lender or Freddie / Fannie etc.

It is interesting that he is sort of saying it's your problem, banks, go deal with it.

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It's also worth noting that he said the problem wouldn't have been as bad, if bad at all, had prices (house) carried on increasing. Does this sound familiar?

This reminds me of some Irish housing bubble blog called "Trees don't grow to the sky". Someone should tell Ben.

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From where I'm sitting this looks like he's saying look 'we at the Fed have no more money to give and we don't want to lower interest rates any more'. So how about we get the banks to suffer greater losses which will save us money.

Recession here we come!

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Yes, but in theory less of a loss. By writing off 10 - 20% of the value instead of 50% they can then refi, either with the existing lender or Freddie / Fannie etc.

but what if the debt has been securitized?

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The primary value in Ben's speech was that it gives us a heads-up of what to expect here quite soon. OUr LTVs are much higher than the average irrespnsible loan in the US which suggests quite a lot of write-downs to come from our banking sector.

This party is just getting started I am afraid.

Just heard on Gloomberg that Gordon has announced that our debt has hit 40% of GDP. :o

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Grrr I just wrote a really long and (I hope) witty multiple choice questionniare taking the piss out of this, and it has disappeared into the technosphere.

Summary is:

If you're a subprime borrower in a subprime neighbourhood, 20% off your debt is nowhere near enough and you'd still be better off walking away

If you're not a subprime borrower and not in a subprime nieghbourhood, then you could easily just fall into arrears for the free writedown. A year's salary for nothing, anyone?

This man is supposed to "run" the biggest economy in the world for god's sake. He's should be going to "special" school.

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  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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