Comments on: Understatement of The Month http://www.socalbubble.com/2007/10/understatement-of-the-month.html Southern California is Experiencing a Real Estate Bubble like never before Fri, 04 Feb 2011 01:16:46 -0700 hourly 1 http://wordpress.org/?v=3.1 By: marinite http://www.socalbubble.com/2007/10/understatement-of-the-month.html/comment-page-1#comment-17678 marinite Mon, 29 Oct 2007 21:08:20 +0000 http://www.socalbubble.com/2007/10/understatement-of-the-month.html#comment-17678 Thanks for the hat tip. I am reciprocating. Yes, denial runs deep here. I have been thinking a lot about why it is that Marinites are so very committed to believing certain myths about here and the Bay Area at large. Is it due to a low self-esteem? Insecurity? Or, as one of my more astute readers says, just plain old massive commitment in one believe (namely, committing to extraordinary levels of housing debt). Thanks for the hat tip. I am reciprocating. Yes, denial runs deep here. I have been thinking a lot about why it is that Marinites are so very committed to believing certain myths about here and the Bay Area at large. Is it due to a low self-esteem? Insecurity? Or, as one of my more astute readers says, just plain old massive commitment in one believe (namely, committing to extraordinary levels of housing debt).

]]> By: Chuck Ponzi http://www.socalbubble.com/2007/10/understatement-of-the-month.html/comment-page-1#comment-17072 Chuck Ponzi Fri, 26 Oct 2007 17:33:19 +0000 http://www.socalbubble.com/2007/10/understatement-of-the-month.html#comment-17072 Hi Laef2, Fires were fine... nowhere near where I live, it has been smoky smelling at our place the past 2 days and smoky at work all week. Here are my thoughts: 1. One can be well shielded from losses and still be a victim of cross-defaults. I doubt this is the last major write down CWide is going to take. Reality will sink in 1st quarter next year. (April 2008) 2. Their servicing arm still has value. 3. As a bank, the suck. If I were a depositor, I would get out. I currently hold emergency funds in 2 different banks just in case so that I can still pay bills if one goes under. 4. It is a bloodbath out there in California real estate. Few can afford their own houses still. If prices want to hold steady, they will be steady for 10 more years. If they want to drop, we can be out of this in 5 to 6. It's possible to hit bottom in 2 or 3 years (09 or 2010), but that would mean continuing the bloodbath and no letup. 5. Continued inflation in energy, food, and healthcare is sapping the strength of the American consumer. $92/bbl for oil? That's not going to go over easy with Christmas around the corner. WalMart already sees troubles and started sales early. I understand that they are reducing supply chain pull-through... but this is only "a little birdie told me" right now. We'll see how well Benton is positioned for the recession. 6. Bernanke and the Fed certainly see the energy, food, and healthcare inflation as transitory based on their movement with the FFR. Let's hope they're right. Crappy cheap apples are selling 2.25/lb at Ralphs, and Gas is now 3.50/gal. Any way you look at it, housing prices cannot hold firm without incomes catching up very swiftly. (remember, Bernanke only cares about incomes increasing, which signals "true" inflation. Rates will quickly rise if that happens without a corresponding output) Chuck Ponzi Hi Laef2,

Fires were fine… nowhere near where I live, it has been smoky smelling at our place the past 2 days and smoky at work all week.

Here are my thoughts:

1. One can be well shielded from losses and still be a victim of cross-defaults. I doubt this is the last major write down CWide is going to take. Reality will sink in 1st quarter next year. (April 2008)

2. Their servicing arm still has value.

3. As a bank, the suck. If I were a depositor, I would get out. I currently hold emergency funds in 2 different banks just in case so that I can still pay bills if one goes under.

4. It is a bloodbath out there in California real estate. Few can afford their own houses still. If prices want to hold steady, they will be steady for 10 more years. If they want to drop, we can be out of this in 5 to 6. It’s possible to hit bottom in 2 or 3 years (09 or 2010), but that would mean continuing the bloodbath and no letup.

5. Continued inflation in energy, food, and healthcare is sapping the strength of the American consumer. $92/bbl for oil? That’s not going to go over easy with Christmas around the corner. WalMart already sees troubles and started sales early. I understand that they are reducing supply chain pull-through… but this is only “a little birdie told me” right now. We’ll see how well Benton is positioned for the recession.

6. Bernanke and the Fed certainly see the energy, food, and healthcare inflation as transitory based on their movement with the FFR. Let’s hope they’re right. Crappy cheap apples are selling 2.25/lb at Ralphs, and Gas is now 3.50/gal.

Any way you look at it, housing prices cannot hold firm without incomes catching up very swiftly. (remember, Bernanke only cares about incomes increasing, which signals “true” inflation. Rates will quickly rise if that happens without a corresponding output)

Chuck Ponzi

]]> By: LAEF2 http://www.socalbubble.com/2007/10/understatement-of-the-month.html/comment-page-1#comment-17055 LAEF2 Fri, 26 Oct 2007 15:32:41 +0000 http://www.socalbubble.com/2007/10/understatement-of-the-month.html#comment-17055 Hello Chuck, Been awhile. Hope the fires didn't give you too many problems. Saw the Countrywide projection that they will be profitable within the next quarter. I'm trying to gauge if they are lying or just well shielded from losses. I imagine they will be "shocked" at the performance of their loans soon and complain when the Feds make them unload all of those properties. Also seems they managed to raise up a bunch of loss reserves but it would seem to be far too little. 1 Billion in loss reserves. Hard to tell how much of a bag holder they really are at this point. I figure lots of lawsuits and liability from insurance companies and pensions funds will follow. The real estate guys will trumpet prices holding firm. Then after prices drop they will trumpet volume is increasing. Same as always. Hello Chuck,

Been awhile. Hope the fires didn’t give you too many problems.

Saw the Countrywide projection that they will be profitable within the next quarter.

I’m trying to gauge if they are lying or just well shielded from losses.

I imagine they will be “shocked” at the performance of their loans soon and complain when the Feds make them unload all of those properties.

Also seems they managed to raise up a bunch of loss reserves but it would seem to be far too little. 1 Billion in loss reserves.

Hard to tell how much of a bag holder they really are at this point. I figure lots of lawsuits and liability from insurance companies and pensions funds will follow.

The real estate guys will trumpet prices holding firm. Then after prices drop they will trumpet volume is increasing.

Same as always.

]]> By: joeyd http://www.socalbubble.com/2007/10/understatement-of-the-month.html/comment-page-1#comment-17047 joeyd Fri, 26 Oct 2007 13:07:12 +0000 http://www.socalbubble.com/2007/10/understatement-of-the-month.html#comment-17047 77%? Is that a typo? All I can say is wow! One of my favorite quotes is "the subprime mess is contained." Another favorite quote (from multiple sources) is "this is just a dip and home sales will pick up again in 2008" Why did the Kool-Aid run out so soon? Drinking is Believing!!! www.drinkingisbelieving.com (hope it's OK to post that - it's a good site) 77%? Is that a typo? All I can say is wow! One of my favorite quotes is “the subprime mess is contained.”
Another favorite quote (from multiple sources) is “this is just a dip and home sales will pick up again in 2008″

Why did the Kool-Aid run out so soon? Drinking is Believing!!! http://www.drinkingisbelieving.com (hope it’s OK to post that – it’s a good site)

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