Housing and Economic Collapse - In Progress #4

[emersonbiggins]

Thread continued from #3, linked here.

[Zardoz]

Massive drops in auto sales. How can the Big Three possibly survive?

Auto Makers Report Sharply Lower November Sales

U.S. light vehicle sales at General Motors and Chrysler plunged more than 40 percent in November, while Ford's sales dropped 31 percent, battered by an economic storm that has sent consumer demand for new vehicles to lows not seen in decades.

GM's sales fell 41 percent, while Chrysler's dropped 47 percent.

Their overseas rivals posted abysmal results Tuesday as well.

Toyota's November U.S. sales tumbled 34 percent, while Nissan's dropped 42 percent and Honda's fell 32 percent.

Like retailers of other big ticket items, automakers have taken a beating in recent months as worries about the economy and unemployment have prompted consumers to slash spending.

At the same time, some people afraid that they won't qualify for credit or that it will be too costly have put purchases on hold.

[Armageddon]

Massive drops in auto sales. How can the Big Three possibly survive?

Auto Makers Report Sharply Lower November Sales

U.S. light vehicle sales at General Motors and Chrysler plunged more than 40 percent in November, while Ford's sales dropped 31 percent, battered by an economic storm that has sent consumer demand for new vehicles to lows not seen in decades.

GM's sales fell 41 percent, while Chrysler's dropped 47 percent.

Their overseas rivals posted abysmal results Tuesday as well.

Toyota's November U.S. sales tumbled 34 percent, while Nissan's dropped 42 percent and Honda's fell 32 percent.

Like retailers of other big ticket items, automakers have taken a beating in recent months as worries about the economy and unemployment have prompted consumers to slash spending.

At the same time, some people afraid that they won't qualify for credit or that it will be too costly have put purchases on hold.

How can they survive ? That's easy.

Pelosi Says Bankruptcy by Automakers ‘Not an Option’


Dec. 2 (Bloomberg) -- U.S. House Speaker Nancy Pelosi said she believes either Congress or the Bush administration will step in to aid domestic automakers because bankruptcy is “not an option.”

“I believe that an intervention will happen,” Pelosi said at a briefing in Washington. “Everybody is disadvantaged by bankruptcy, including our economy, so that’s not an option.”

Pelosi said Congress will either approve new loans for the auto industry or the Bush administration will provide funding through the $700 billion financial-markets rescue plan approved by Congress last month.


http://www.bloomberg.com/apps/news?pid= ... kUNf9lHUKo

[seldom_seen]

U.S. House Speaker Nancy Pelosi said she believes either Congress or the Bush administration will step in to aid domestic automakers because bankruptcy is “not an option.”

Looks like we don't really have an "option" except to sit back and watch the pathetic process of the government trying to spend its way out of being broke.

[gnm]

Looks like we don't really have an "option" except to sit back and watch the pathetic process of the government trying to spend its way out of being broke.

+1 You got that right !

-G

[idiom]

They should have switched to a last automaker standing policy. The last manufacturer to file chapter 7 gets aid.

[hironegro]

[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=ay7HZbCLGLEA&refer=news]China Property Slump Threatens Global Economy as Growth Slows
[/url]

Dec. 2 (Bloomberg) -- House prices in Shanghai, Shenzhen and Guangzhou are plunging, and the global economy may grind almost to a halt next year because of it.

Construction of homes, offices and factories fell at least 16.6 percent in October after rising 32.5 percent a year earlier, according to Macquarie Securities Ltd. That's squeezing an economy already slowed by recessions in the U.S., Japan and Europe that have cut demand for exports. Building is the biggest driver of China's expansion, contributing a quarter of fixed- asset investment and employing 77 million people.

[hironegro]

It was awfully quiet in Atlanta last night ...

How does the old saying go? If a tree falls in the forest and no one is around to hear it, does it make it a sound? After attending the Grizzlies/Hawks game last night in Atlanta, I feel like I've come up with the basketball equivalent to that phrase: If an NBA game is played, but there is nobody there to see it, does it really count?

I knew the NBA was having attendance problems, but seeing last night's crowd at Philips Arena, or lack thereof, makes me believe that the NBA's issues are more severe than I originally thought.

[Armageddon]

NBC may scale back programming


http://www.breitbart.com/article.php?id ... _article=1

[drgoodword]

Why Home Values May Take Decades To Recover

By Dennis Cauchon, USA Today

Rick Wallick moved into a new, three-bedroom $200,000 home in Maricopa, Ariz., in October 2005. Today, the home is worth $80,000.

The disabled software engineer stopped making mortgage payments this month. His $70,000 down payment is now worthless. His dream house will be foreclosed on next year.

[snip]

As painful as the decline has been, history suggests home values still may have a long way to drop and may take decades to return to the heights of 2½ years ago.

"We will never see these prices again in our lifetime, when you adjust for inflation," says Peter Schiff, president of investment firm Euro Pacific Capital of Darien, Conn. "These were lifetime peaks."

The boom in home prices — fueled by heavily leveraged loans built on low or even no down payments — made it easy to forget that housing values had been remarkably stable for a half-century after World War II, rising at roughly the same pace as income and inflation. Prices soared in most of the country — especially in Arizona, California, Florida and Nevada and metro areas of Washington, D.C., and New York — during a brief period of easy lending, especially from 2002 to 2006. That era's over.

So far, home values nationally have tumbled an average of 19% from their peak. As bad as that is, prices would need to fall as least 17% more to reach their traditional relationship to household income, according to a USA TODAY analysis of home prices since 1950. In that scenario, a $300,000 house in 2006 could be worth about $200,000 when real estate prices hit bottom.

The price plunge has wiped out trillions of dollars in home equity and caused the worst financial crisis since the Great Depression. Susan Wachter, professor of real estate at the University of Pennsylvania, fears that foreclosures and tight credit could send home prices falling to the point that millions of families and thousands of banks are thrust into insolvency.

[Spanktron9]

Home Prices drop most on record (Bloomberg)

Prices will plunge further as job losses sap demand, foreclosures add to the property glut and prospective buyers get turned away by mortgage lenders. The Federal Reserve this month cut its benchmark interest rate target to as low as zero and said it would take more steps to ease borrowing as the longest postwar recession looms.

“November sales just collapsed,” said Chris Low, chief economist at FTN Financial in New York. “Price declines are accelerating. As bad as this is, it’s going to be considerably worse in a month’s time.”

[Atlantean_Relic]

This thread needs a mark 2 it is busted, takes 5 minutes just to load it.

[RonMN]

Yup, it does take 5 minutes for this thread to load...no wonder we have so few posts...

Now back to that smell of panic & doom in the air.

UBS closing U.S. clients' offshore accounts

Quote:
ZURICH (Reuters) – Swiss wealth manager UBS AG (UBSN.VX) (UBS.N) is closing all the offshore accounts of its U.S. clients, the bank said on Friday, as it comes under pressure from U.S. tax authorities.

The Swiss bank decided in July last year to stop offering offshore accounts to U.S. citizens after it was targeted by a U.S. tax investigation which challenges Switzerland's famous banking secrecy laws.

[vtsnowedin]

I'm one of the property assessors for my town. Here we are called listers. I had a owner come into the office the other day with some questions. He had bought one of the biggest McMansions in town last year for some fifteen percent less than the original asking price and a bit below what we had it appraised for. Apparently things are not going well for him and the property taxes are beginning to bite.He was asking about putting his land into current use to lower the taxes and said he was considering tearing down part or all of the house to save on taxes.
I see a foreclosure in his future. I also wonder what the guy that built this million dollar wonder did with the money he netted from the sale. He had time to get it fully invested in the stock market before last October. Whose the biggest loser?

[joewp]

How long can companies like Toll Brothers keep seeing results like this?

Bizjournals

Toll's building revenue cut in half
Luxury homebuilder Toll Brothers Inc. said revenue dropped 51 percent, according to preliminary results, in the fiscal first quarter.

The Horsham, Pa., company anticipates taking between $100 million and $200 million in pre-tax writedowns for the first quarter, though it is still making a final calculation. Toll (NYSE: TOL) offered no guidance and expects to report final results March 4.

Its preliminary results were down across the board. Revenue was $409.3 million. Backlog was $1.04 billion, down 56 percent.

Signed contracts were $128.1 million, a 66 percent drop.

[bratticus]

Wow long threads are fast now.
Meanwhile back to being on-topic:

Country's largest banks suspend foreclosures

Mark Calvey
San Francisco Business Times
February 13, 2009

Wells Fargo, J.P. Morgan Chase, Bank of America and Citigroup Inc. have agreed to halt home foreclosures while the federal government works out a plan to stabilize the nation’s banking industry.

“We will not add to the foreclosure process any new owner-occupied residential loans that are owned and serviced by J.P. Morgan Chase,” said J.P. Morgan Chase CEO Jamie Dimon in a Feb. 12 letter to Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.

That moratorium would remain in effect through March 6.

Citigroup said it would put a moratorium on foreclosures of Citigroup-owned loans on principal residences, among others. Citi’s moratorium is scheduled to last until March 12, barring federal action before then.

San Francisco-based Wells Fargo, one of the nation’s largest mortgage lenders, joined the moratorium Friday along with BofA.

“The vast majority of the mortgage loans Wells Fargo services are owned by other investors. We are fully committed to helping our customers find ways to avoid all preventable foreclosures, and we are working with these investors and related contractual commitments to determine how we will support the moratorium request,” said Wells Fargo spokesman Chris Hammond.

... snip ...

So nice to think the weather will be warmer when foreclosures resume again.

[Armageddon]

They can't keep up with the foreclosures, so they are making it sound like they are doing a good deed by halting them for a while. This is so they can catch up. Also, when they have too many homes on the market, it devalues the current listings.

[FloridaGirl]

Here's some scary numbers from the Federal Reserve:
Non-borrowed Reserves
2008-Dec. 17 153152
2008-Dec. 31 224376
2009-Jan. 14 341641
2009-Jan. 28 287293
2009-Feb. 11 112532

Look at the delta for the last 2 weeks! No wonder they are urgently pushing out the second half of the TARP.

I'm not sure how it got so positive since in October it went down to
-332803. I'm sure the TARP was a big part but that doesn't explain it all. I assume the rest is accounting trickery.

In any case, a drop of $175 billion in just 2 weeks is astonishing!

http://www.federalreserve.gov/releases/h3/Current/

[eXpat]

Failure to save East Europe will lead to worldwide meltdown

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.

Mr Pröll tried to drum up support for his rescue package from EU finance ministers in Brussels last week. The idea was scotched by Germany's Peer Steinbrück. Not our problem, he said. We'll see about that.

Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.

Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble.

"This is the largest run on a currency in history," said Mr Jen.

In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.

Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.

They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data).

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html

[Ludi]

I just checked some real estate prices around here and they are still insane - even more insane than they were last time I looked. 25 acres for over $750,000. Holy crapping crap! And these tracts are actually selling, apparently! We bought our 20 acres for $65,000 about 12 years ago, and thought it was a bit overpriced then.