Marc's Mortgage Matter's

"Eleven indicted Somali pirates dropped a bombshell in a U.S. court early this morning, revealing that their entire piracy operation is a subsidiary of Goldman Sachs. The pirates explained that the pirates forcibly attacked ships that Goldman had already shorted, and had merged their operations with Goldman in late 2008 to take advantage of the more relaxed regulations governing bankers as opposed to pirates, 'plus to get our share of the bailout money.' In the aftermath of the shocking revelations, government prosecutors were scrambling to see if they still had a case against the Somali pirates, who would now be treated as bankers in the eyes of the law."


Seriously, last Tuesday was quite the day for the financial markets. For an appetizer, we started with S&P cutting Greek debt to junk and downgrading Portugal. For the salad course, US home prices slipped, but Consumer Confidence rose. For the main course, Goldman Sachs representatives sat in front of the Senate and fended off accusations of exploitation while the stock market went into the tank (on fears of strong reform). And then, for dessert, the $44 billion 2-yr note auction was "mediocre" - but by then it didn't matter.

Goldman Sachs executives tried to fend off accusations they inflated the housing bubble, sold clients bad deals and made billions off the market's collapse, in a high stakes Senate hearing. Facing tough questions from a panel of Senators, the current and former employees said Goldman was managing risk on individual positions rather than making a broad bet against the future of the housing market. Friday we got rumblings of possible criminal chit-chat to start this week off with a bang ;/

Do you think that, years from now, we'll be telling our grandkids how analysts and traders would analyze every word of the Fed statement that was produced after they met just to look for microscopic clues on the markets? And how prehistoric that seems? This week we'll hear from the Fed, and most expect that the Fed is seeing the same thing many are: slow but sustained economic growth, lagging consumer spending, tight credit, a muddling housing market, and little sign of inflation. The committee will likely conclude that conditions continue to warrant leaving rates "exceptionally low" for an "extended period."

The Federal Reserve sounded cautiously more upbeat on the U.S. economic recovery and jobs as it renewed its promise to keep interest rates low for an "extended period." Consumer and business spending were picking up steam, and inflation is subdued. "Economic activity has continued to strengthen and ... the labor market is beginning to improve," the central bank said. They pointed out as well, however, that housing starts are still depressed and bank lending continues to contract.

The debt crisis, which began in Greece, might affect economies across Europe and beyond. Heck, here in the US our economy is trying to do better, and if a large trading partner such as Europe slows down, it will certainly impact our economy. There are no good solutions here, only very difficult ones. In order to get financing, Greece must willingly put itself into a multi-year depression - try explaining that to any resident. Greece's economy is mostly based on tourism, and borrowing more money, when it cannot afford to pay back what it already has, will not solve the problem. Riots and going on strike don't really help, and banning short selling on its stock market for the next two months will be interesting. Money is quickly leaving Greek banks, which makes sense, as how can a bankrupt Greek government guarantee Greek bank deposits? Portugal, Spain, Ireland, etc. are watching closely.

The last of the extraordinary props for the nation's mortgage and home sales markets have come to an end. Just four weeks after the Federal Reserve stepped away from the mortgage market comes the end of first-time and trade-up homebuyer tax credits.

Meanwhile, the effort to prop up failing homeowners though modification and other initiatives enjoys a continuing commitment (albeit way late for many - and not enough for most). While the Fed program of buying up $1.25 trillion of Mortgage-Backed Securities was easily the more important of the two -- after all, both homebuyers and homeowners can enjoy low mortgage rates -- but the tax credit has arguably been a key element in fostering demand for home purchases, and spurring consumers to act. We won't know the actual results of the program for some time, until all tax filings for 2009 as well as for 2010 have been completed, but the home-sale indicators seem to suggest that there has been positive, measurable effect on weak housing markets.

Mortgage rates have remained low since the Fed exited the stage, and have trended lower over the last couple of weeks as Greece's (and perhaps Spain's) economic issues have produced a run into the safe-haven investment of US-backed debt. We wonder how long they will/can stay this low which was around 5.25% still last week.

I urgently needed a few days off work, but, I knew the Boss would not allow me to take leave.

I thought that maybe if I acted 'Crazy' then he would tell me to take a few days off.

So I hung upside-down on the ceiling and made funny noises.

My co-worker (who's not too bright) asked me what I was doing.

I told her that I was pretending to be a light bulb so that the Boss might think I was 'Crazy' and give me a few days off.

A few minutes later the Boss came into the office and asked, 'What in the name of good GOD are you doing?'

I told him I was a light bulb.

He said, 'You are clearly stressed out.' Go home and recuperate for a couple of days.'

I jumped down and walked out of the office...

When my co-worker followed me, the Boss asked her, '..And where do you think you're going?!'


She said, 'I'm going home, too. I can't work in the dark.