Friday, October 9, 2009

Bailout Redux

Felix Salmon:
Whitney Tilson passes on this chart, showing delinquencies at the FHA. He notes that the FHA is a crucial source of support for the housing market right now, providing a whopping 23% of all mortgages. If you have a subprime credit rating of 600, you only need to put 3.5% down to get an FHA loan; even if you have a positively wrecked credit rating of 500, you can still get a mortgage with only a 10% downpayment. And the people brokering a lot of these loans are often the selfsame shady characters who represented the worst face of the subprime bubble.

How high will the 2008-vintage delinquency rates eventually go? That’s the crucial question, since those mortgages represent more than 20% of the entire FHA portfolio. They’re already high, at 19.4%, but they could go much higher, given that the 2007-vintage loans are over 30%.

We’ve seen this movie before; we know how it ends. There’s going to be an FHA bailout, and it’s going to be big. The only question at this point is just how big it’s going to be.

The FHA took over the subprime mortgage business. The government's now on the hook for nearly a quarter of all mortgages in the country through the FHA. They basically took over all the bad Fannie and Freddie subprime mortgages. The coming collapse of the FHA is one of the major reasons why the stock indexes are not a true tale of the economy. When the FHA goes under, it will cost hundreds of billions if not trillions to bail it out. We don't have that kind of money right now.

But we'll still have to pay for it. The only lesson learned from the financial meltdown of 2008 is that Too Big To Fail will always be bailed out. The FHA is no different.

Tick. Tick. Boom.

Sour Grapes

Via D-Day comes this from the Miami Herald:
South Florida Republicans held a weekly meeting at a gun range, shooting at targets including cut-outs of a Muslim holding a rocket-propelled grenade launcher.

The GOP candidate to replace U.S. Rep. Debbie Wasserman Schultz fired at a full-body silhouette with "DWS" written next to its head.

Wasserman Schultz declined comment, but the Democratic Congressional Campaign Committee called the Tuesday event "extremist" and "sexist."

Robert Lowry, who's vying for Wasserman Schultz's seat, initially described his target as a joke. Minutes later, he called it a mistake.

Others refused to apologize for the Southeast Broward Republican Club event, featuring assault rifles and handguns. A conservative activist said they should stand up for their beliefs in the heavily Democratic county.

The right to riddle your opponent with bullets in effigy I believe is in the Bill of Rights, right after the Right To Call I Was Just Kidding After Being Busted On Overt Displays Of Violence. It's like totally in one of those Amendments, really.

It's a living document, anyways.

I Do Not Believe That Word Means What You Think It Means

"There will be an outcry from those on the right who will say that Obama's nomination, made two weeks into his presidency, is impossible to justify, but I think such an outcry will sound like right-wing whining," Huckabee wrote. "The better response is simply to allow those on the left to explain what he did in his first two weeks as President that merited such recognition."
The latter is not right-wing whining, of course. It's right-wing concern trolling.

In Which Zandar Answers Your Burning Questions

Doug J at Balloon Juice asks:
His narcissism problem? Jesus fucking Christ, when did that become an official Villager meme?

Update. Yes, I know Kaus and Will have hitting the narcissism thing hard, but I didn’t know that it was an official Villager meme yet. Ambinder using the expression, without air quotes or anything like them, means that it’s now official.

Your answer is apparently "On Tuesday."

A President we can actually be proud of means he's just another uppity black man, you see.

Zandar's Thought Of The Day

Erick Erickson should really change his name to Asshole Assholeson.
I did not realize the Nobel Peace Prize had an affirmative action quota for, but that is the only thing I can think of for this news.
Get thee hence.

The Next Mortgage Meltdown

The Congressional watchdog for the President's mortgage relief program is saying that major trouble is brewing in the months ahead.

From July 2007 through the end of August, 1.8 million homes were lost to foreclosure and 5.2 million more foreclosures were started, the report said. The HAMP program seeks to prevent between 3 million and 4 million foreclosures; on Thursday, the Treasury Department announced that its initial goal of having 500,000 trial mortgage modifications started by Nov. 1 had been met.

The congressional panel wasn't critical of those efforts; it simply said that they'll be swamped by changes in the housing market. The economic crisis, with an unemployment rate of 9.8 percent and rising, is pushing many more prime mortgages, those given to the most creditworthy borrowers, into default.

On top of that, a new class of exotic mortgages called pay option adjustable-rate mortgages and interest-only mortgages are due to reset to higher variable rates. These exotic loans were usually given to richer borrowers on fancy homes worth far less today than the value of the underlying mortgages. These mortgages are often too high-priced to qualify for government modification programs.

"It simply isn't clear that the programs in place will do enough to tame the crisis and have a significant impact on the broader economy," Elizabeth Warren, a Harvard professor who heads the panel, said in the report. "It increasingly appears that HAMP is targeted at the housing crisis as it existed six months ago, rather than as it exists right now."

Foreclosures also may rise to levels far beyond what HAMP anticipated because a growing number of homes are termed "underwater," or worth less than the balance due on their mortgages.

"Today, one-third of mortgages are underwater, and if housing prices continue to drop, some experts estimate that one half of all mortgages will exceed the value of the homes they secure," the report said. "Negative equity increases the likelihood that when these homeowners encounter other financial problems or life events cause them to move, they may walk away from their homes and their over-sized mortgages."

Much will depend on whether home prices have bottomed, as some economists think is happening now. Housing prices have shown small but steady improvements in most markets since March, according to Standard & Poor's Case-Shiller index.

And I can tell you my opinion is that they haven't bottomed at all.

We're still in plenty of trouble.

Nobel Foul Prize

And while I completely expect Republicans, Wingers and the Ladies' PUMA Auxiliary (what the Rumpies call the Rich Correntean Lather) to dump on Obama's Nobel Peace Prize, I have to throw the flag on the DNC for this one.
The Republican Party has thrown in its lot with the terrorists — the Taliban and Hamas this morning — in criticizing the President for receiving the Nobel Peace prize. Republicans cheered when America failed to land the Olympics and now they are criticizing the President of the United States for receiving the Nobel Peace prize — an award he did not seek but that is nonetheless an honor in which every American can take great pride — unless of course you are the Republican Party. The 2009 version of the Republican Party has no boundaries, has no shame and has proved that they will put politics above patriotism at every turn. It’s no wonder only 20 percent of Americans admit to being Republicans anymore – it’s an embarrassing label to claim.
It's a low blow guys, and you're better than that. That's the kind of crap I'd expect to see from Michael Steele, not Tim Kaine's outfit.

The rest of the argument is fine, but the terrorist thing is over the top.

15 yards, loss of news cycle.

[UPDATE 11:50 AM] Obama's remarks however were spot on.
President Obama on Friday said he was "surprised and deeply humbled" by winning the 2009 Nobel Peace Prize.

"I do not view it as a recognition of my own accomplishments, but rather as an affirmation of American leadership," Obama said from the White House Rose Garden.

"I will accept this award as a call to action."

Obama said he did not feel he deserves "to be in the company" of past winners.

Nailed it on all fronts, and brilliantly.

Halfway Home

Jason Rosenbaum at FDL is reporting that 30 of the 60 Democrats in the Senate have signed a letter demanding Harry Reid bring a bill with a robust public option to the floor.
As it stands, the health insurance market is dominated by a handful of for-profit health insurers that are exempt from the anti-trust laws that ensure robust competition in other markets across the United States. Without a not-for-profit public insurance alternative that competes with these insurers based on premium rates and quality, insurers will have free rein to increase insurance premiums and drive up the cost of federal subsidies tied to those premiums. This is simply not fiscally sustainable.

We recognize that the two Committees with jurisdiction over health reform – the Senate Finance Committee and the Senate Health, Education, Labor, and Pensions (HELP) Committee – have taken two very different approaches with respect to this issue. However, a strong public option has resounding support among Senate Democrats – every Democrat on HELP, three quarters of those on Finance, and what we believe is a majority of the caucus.

And while this is a wonderful sentiment and a very true picture of the situation, it's the 30 Democrats not signing this letter I worry about...including Harry Reid himself.

Don't blow this, guys.

Double Dip Decimation

Add Carl Icann to the list of financial players who are warning of a second recession on the horizon.
"I think that you have to be cautious. It's on a precipice right now and it could really go either way," he said.

Icahn warned against seeing the recent stock rally as a sign that the economy has turned a corner.

"It's a myth to say the market is a good indicator of the economy. I think individuals are much more of an indictor," he said.

"The market is schizophrenic at this point. So you have trillions of dollars literally in consumers hands, they don't want to spend it, they're afraid to spend it," he added.

The Clap Harder Theory Of Financial Recovery isn't going to work for much longer, guys. Gold keeps pushing new highs as the dollar continues to slide, and that will eventually cause serious damage to our economy, and soon.

Don't believe the hype in the long term.

The Pretty Hate Machine Goes To Stockholm (Updated)

Today's Nobel Peace Prize win for President Obama has taken the world by surprise, but the reasons for the President's win are valid enough. What's not valid? You guessed it, the Pretty Hate Machine is in full gear this morning attacking the President's win.

Jules Crittenden:
Giving the award to a president who is in the process of or on the verge of ceding to belligerents in at least three highly volatile geopolitical arenas neatly accomplishes that, and coming at the beginning of Obama’s term, will encourage people view his actions and their consequences in terms of “peace.”

It also makes up for the gross slight to Neville Chamberlain in 1938.

Dan Riehl:
I do not freakin' believe this. But via the BBC- it appears to be true. For what? Are you frickin' kidding me? What a stupid joke. What a worthless award. Video of the announcement here. They put weight on his WORK? For Nuclear Weapons? All he has done is TALK! This is total BS!

THE MAN HASN'T DONE ANYTHING!! I can't believe this. Really, I can't. What a waste. One sensed this was just a worthless political award anymore. But this removes all doubt. If I were on the committee I'd be embarrassed. This is an absolute disgrace.

Given Obama's objective lack of actual accomplishments so far, the "science is settled" that the Nobel Peace Prize is a hopelessly politicized popularity contest. Don't even try to argue.'s Matt Lewis:
The award could not have been given for accomplishments, but the committee did note in a citation that Obama has, "captured the world's attention and given its people hope for a better future."

It seems Obama was awarded based on zero accomplishments, but on lots of "hope" for the future ...
Two things: A sitting American President winning the Nobel Prize for Peace simply serves as proof that he's not killing Raghead Sunzabitches fast enough for this crowd.

It also means the same people who ruthlessly attacked the President for Chicago not getting the 2016 Olympics saying it was proof Obama has no real international standing are now doing exactly what they would have done if Chicago had won: attacking the event as a "popularity contest" that has no real meaning.

The only thing that has any meaning to these clowns is getting another war on. God forbid an American President does something like win a Nobel Prize, it just makes him a "narcissistic international rock star" or something, right?

It does not matter what this man does for America, the insane Wingers will attack him anyway. Everything they do is predicated on justifying the hatred they have for the man.

[UPDATE 7:45 AM] YAFB at Rumproast called it earlier this morning:

Since a major part of my reason for favoring Obama in last year’s election was the hope of at least a degree more civility from the US in international relations, I’m happy to see anything that rewards such behavior. Though, of course—to say the least—there’s much room for further improvement even at this early stage in the Administration (excuse the British understatement, and this is maybe something folks will want to explore in the comments). I may be a cynical old once-militant hippie, but after the horrors of the last decade or so, I never thought I’d live to witness the day when another US president said anything about nuclear disarmament except “maƱana” or “No fucking way.” It’s a start.

Over the course of the day, I’ll be looking for prizewinning hyperbolic or full-blooded spit-the-dummy reactions from the blogosphere and other media. Do join in if you spot anything worthy of a facepalm, food for thought, or a hearty chuckle, and I’ll post the most noteworthy as updates.

Oooh! Oooh! Mista Kotter!

[UPDATE 2 8:38 AM] On a more serious note and playing Devil's Advocate here, if the Wingers are right, doesn't that mean that America's international standing and belligerent attitude under the previous administration was so dismal and such a threat to world peace that the Nobel committee gave a rookie President nine months in on the job the f'ckin Peace Prize for basically being a sitting President not named George W. Bush?

And the guy really hasn't changed the worst of Bush's policies, either. We're still fighting two wars, and still detaining some "suspected terrorists" for eternity and causing a hell of a lot of collateral damage flat out killing others. And still this guy gets a Nobel Peace Prize because despite the killings and bombings and war, what he's done so far has been considered that much of an improvement.

What does that say about how the world viewed America post-9/11 under Bush/Cheney?

[UPDATE 3 8:53 AM] Attaturk at Atrios's place thinking the same thing:
I guess Krauthammer was right, the international regard for the United States has so fallen after Obama became President that they just awarded our Chief Executive the Nobel Peace Prize -- probably for not being like Charles Krauthammer.
Amen to that.

[UPDATE 4 9:03 AM] Josh Marshall also agrees:
But the unmistakable message of the award is one of the consequences of a period in which the most powerful country in the world, the 'hyper-power' as the French have it, became the focus of destabilization and in real if limited ways lawlessness. A harsh judgment, yes. But a dark period. And Obama has begun, if fitfully and very imperfectly to many of his supporters, to steer the ship of state in a different direction. If that seems like a meager accomplishment to many of the usual Washington types it's a profound reflection of their own enablement of the Bush era and how compromised they are by it, how much they perpetuated the belief that it was 'normal history' rather than dark aberration.
He won because he's managed to not kill the planet yet, and people expected us to have done so by now. My goodness.

[UPDATE 5 9:35 AM] NY Times columnist Nicholas Kristof makes a logical, legitimate argument as to why Obama really should not have won the award.
He’s been largely absent on Sudan, Congo, Burma and global poverty and health issues, and doesn’t even have a USAID administrator. I think he has the right instincts on these issues and expect him to get engaged, but shouldn’t the Nobel Peace Prize have a higher bar than high expectations? Especially when there are so many people who have worked for years and years on the front lines, often in dangerous situations, to make a difference to the most voiceless people of the world? I think of Dr. Denis Mukwege at the Panzi Hospital in eastern Congo, or Jo and Lyn Lusi at the Heal Africa Hospital also in eastern Congo, or Dr. Paul Farmer of Partners in Health for his tireless work in Haiti and Rwanda, or Greg Mortenson traipsing all over Pakistan and Afghanistan to build schools, or Dr. Catherine Hamlin working for half a century to fight obstetric fistula and maternal mortality in Ethiopia, or so many others. In the light of that competition, it seems to me that it might have made sense to wait and give Obama the Nobel Peace Prize in his eighth year in office, after he has actually made peace somewhere.
Which I can accept, October 2016 would make sense. I also like the sound of Obama's "eighth year in office", but that's another thing.


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