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Up again today on: “on Countrywide Financing”? With automakers?

Wait, let’s get this straight. CFC, who just laid off 12,000 more people, whose stock is at an all time low, and is being sued by employees over 401k, is making a deal to offer financing to GM, whose sales have recently been better, but been tapering off for years, is barely holding onto #1, as we enter into a recession where Toyota is expected negative sales as a result, and stocks are up more than 1%?

Riddled with ignorance, and irrational optimism, this comment sums up how bliss it must be:

“It appears that this credit crunch may not be as bad as some people thought,” said Charles Norton, principal and portfolio manager at GNICapital, crediting the Countrywide news with lifting overall investor sentiment.

As I type this the DOW is up 175pts.

You be the judge.

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Navydoc, you read my mind.

The line might look like this, give or take:[img_assist|nid=4776|title=Graph|desc=|link=node|align=left|width=466|height=378]

The trough at the Great Depression was a result of job loss for the most part, right?

So was the insane high to the far right a result of job growth? Right…

We’re used to graphs like this but most people aren’t. This is crazy. And of course this is national, and local is different, but as a national comparison the argument for why this is not logical is valid: incomes cannot support these price levels.

Home prices track with incomes at this level, and incomes according to an MSN article have barely kept up with inflation. Assuming they mean core inflation, which excludes food and energy, then really wages are down, and home prices will follow.

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I am astonished that economists like that are that delusional when it comes to home prices vs. incomes. I suppose there are always dissenters whatever the reality.

Tell the people losing their homes at record levels now is a good time to buy.

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Well, fortunately for my 401k stocks are up about 1.4% today, apparently “in hopes of rate cut”…

I’d much rather it be on strong company earnings, a decrease in CPI/inflation, or even strong sales, but up 1.4% on hopes that the FED will lower rates? That’s a huge increase based mostly on the glass being half full. Didn’t lowering rates arguably get us into this mess? Don’t we need to encourage people to save money so they can one day actually afford a home, not spend more?

Has irrational exuberance been replaced by irrational optimism?

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Pathetic.

Why don’t they just go out and beg for money…

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Question for the experts here:

Countrywide is offering the highest rates I can find on a CD right now 5.49%, min 10k, for 1 year.

It’s obvious they’re desperate for money, but how can they do this? Or more importantly, isn’t this quite a risk? Sure it’s FDIC insured, but what happens if you open a CD with CW and they go BK? Do you get your money back? Does FDIC pay you out? What about interest?

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How come prices have not dropped very fast?

It also takes time. Foreclosures don’t typically go for the rock-bottom prices people think they do. They’ll go for fair market value, which will likely be marginally less than recently sold comps.

As lenders over-react to the credit crisis it will be harder to get money to buy, and price drops will accelerate. As sales continue to slow, and defaults increase, putting more homes on the market, buyers who can qualify will have their pick. This snowball just starting rolling. It’s gaining speed and mass every day, and probably will for 3-4 years.

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This line crackps me up:
“Further, the situation in Los Angeles does not come close to what happened in the 1990s recession caused by the demise of the defense industry, followed by the Rodney King riots, fires, earthquakes and floods.

A lot of Realtors in this area are disillusioned. They think LA is invincible, impervious to economic downturn because stars live here.

As I have stated several times, I have to agree, this time is different. This time the layoffs will be caused by housing, which will drive sales and prices down harder. Countrywide HQ are right near Aguora, so if more layoffs come there lil ‘ol Susan may eat her words and then some.

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To me the down days signify the coming end of a bull market. I think the large fluctuations we see are a clear sign of a very unstable market, largely a result of the housing bubble.

I’d rather see modest gains of 1% a month or so. This 1% a day stuff is crazy.

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Agree on both accounts – minimal actually benefitting from this, but still wrong. Somewhat makes me wonder if it’s designed more to quell complaints and ease investors, or actually benefit some people.

I tend to think, and hope this will only benefit people who defaulted because of job loss, in non-mortgage industries. Then again there have always been foreclosures, so I go back to agreeing with SDR that this is wrong.

I’m going to resubmit my request to the FHA for my share of some money to help me afford a home.

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Come on guys, just because they bought a $400,000 home with a $36,000 income doesn’t mean they should be held RESPONSIBLE for their actions.

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The FEDs job is inflation and employment.

Frankly I don’t see how lowering rates will correlate directly to job growth, but it will be interesting on the 19th to see what FED does.

They lower rates they increase inflation. They keep them, the market will have a panic attack and sell off huge.

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“I love how this is such a shock to everyone.”

No kidding. Especially when you consider the only reason our economy hasn’t had that forbidden 9-letter R word is because the low rates that fueled the housing bubble in turn fueled our economy for the past 5 years.

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I love how they say this is a surprise. Right… and so was people who owe money to Blockbuster defaulting on a $500,000 home loan.

I think it will pickup mid-day but still end 100pts down or so. The prospect of the FED coming to the rescue with more money and/or a rate cut will keep the bulls in the game a little longer.

I hate to admit but if I had to guess the FED will probably cut rates given the amount of pressure for it now.

I’d guess the death of the bulls will arrive when we have a one week rally after the cut, and then $100 Billion in mortgages reset in the coming months dropping it even harder.

The idea of a rate cut as helping the problems that were the result of the rate cut is just about in line with the logic our economy seems to be under these days.

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People forget the housing bubble rescued us from the dotcom and 9/11 recessions, and any effort is only going to delay the inevtiable. Recessions are a normal part of the economic cycle.

Never mind the moral issues behind it, how many homeowners will this truly help since most won’t qualify under new standards anyway? All this does is throw tomorrow’s money at today’s problems by putting a bandaid on a dam of bad debt. But of course no politician thinks past the 2 minute speech they are giving.

So much for a free market system. At least communism is noble enough to take from the rich and give to the poor. Bush wants to take from the financially prudent and give to the foolish.

Adam Smith is rolling in his grave, as Carl Marx says I told you so.

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