<p>Storytime:
My big brother (big NYC bank, high up functionary), visiting Mom (92 yo, frail) and asked me what I think if we sell the coastal house to help pay for her care. I replied, OK by me, but what our coastal neighbor got in 2006 on a smaller house with needed maintenance of $100k, is not what we can get in 2008-09. There are second homes at the coast which are in receivership, that are newer, better insulated, closer to the beach, larger, better designed, and equipped than our family’s vacation house and could be sold at lower prices, IF there was a buyer. </p>
<p>People can and will get mortgages, just not at the terms we had in 2002-07. </p>
<p>The next five years, I don’t know. But I do know, if we get poor advisors (as the last bunch) who influence the White House, we are in deep trouble.</p>
<p>“Ok, fair enough. But isn’t the goal of having lower income people experience the American dream of homeownership a very very very good thing? Shouldn’t we be taking some risks to see that accomplished?”</p>
<p>There are many that can’t handle the responsibilities of home ownership. At least given the costs of home ownership. That’s one thing the housing bubble implosion has shown.</p>
<p>Bentley cuts output after sales fall
By John Reed in London
Thursday Sep 4 2008 16:55</p>
<p>Bentley Motors, one of the world’s most exclusive carmakers, is cutting production by about 15 per cent in response to an accelerating fall in global sales of its high-end cars.</p>
<p>Bentley will reduce shifts and hours worked for some of its slower-selling models at its plant in Crewe, north-west England. It will also discontinue the contracts of up to 50 agency workers, Franz-Josef Paefgen, the brand’s chief executive, told the Financial Times. </p>
<p>Perhaps, IFF we the people actually got to discuss the issue openly, and collectively chose to accept the risk. But, instead, Fannie and Freddie pour thousands into the campaigns of both parties…hmmmmmmm</p>
<p>btw: why is a “quasi-governmental” corporation even allowed to influence Congress?</p>
<p>Long-term home ownership is tougher than it looks for those that haven’t gone through it. If you have a great job and great long-term prospects, then it may be far easier. If not, then you’re probably subject to economic cycles which can take many twists and turns over a 30-year mortgage payment period. You might have health problems, lose your job, need to replace the roof, get your homeowners insurance raised to where your property taxes are, get your property taxes cranked up, have to deal with car maintenance issues, deal with rising fuel prices, etc.</p>
<p>We’re generally used to inflation with rising wages but wages can fall in deflationary times while your mortgage payment is fixed. I think that home ownership can be tough on all classes (witness lots of anecdotal stories of those with upper-class incomes getting foreclosed on) but it’s toughest on those with the fewest resources.</p>
<p>lower income families don’t need to be getting loans on $500,000 mcmansions to fulfill the american dream. I don’t want to have money going to families that bought to much house and banks that mediated the process. If people learned to live within their means, many of these problems might be less severe or even non-existent</p>
<p>Apparently some of the regional banks own a lot of FNM/FRE relative to their capital base and they may require a bailout too with the trashing of common and preferred.</p>
<p>The Federal Banking Agencies React to Takeover of Fannie Mae and Freddie Mac</p>
<p>The federal banking agencies have been assessing the exposures of banks and thrifts to Fannie Mae and Freddie Mac. The agencies believe that, while many institutions hold common or preferred shares of these two government-sponsored enterprises, a limited number of smaller institutions have holdings that are significant compared to their capital.</p>
<p>The Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision are prepared to work with these institutions to develop capital-restoration plans pursuant to the capital regulations and the prompt corrective action provisions of the Federal Deposit Insurance Corporation Improvement Act.</p>
<p>All institutions are reminded that investments in preferred stock and common stock with readily determinable fair value should be reported as available-for-sale equity security holdings, and that any net unrealized losses on these securities are deducted from regulatory capital. </p>
<p>“I own AIG right now. Have a nice loss in it too. What was I thinking?”</p>
<p>You think that you have problems?</p>
<p>The government intervention comes just over a month after Legg Mason’s Miller reported a sizeable purchase of Freddie shares. Miller came to fame with a 15-year run of beating the S&P 500. But that streak ended in 2006, and since then his Legg Mason Value Trust has lagged far behind the market.</p>
<p>Miller’s run of poor results hasn’t made him any less aggressive, however. He has owned Freddie shares for some time but has been doubling down on the company as its shares plunged over the past year. Legg Mason owned 15 million shares at the end of 2007, when Freddie stock was fetching $34 a share in the market. He then boosted that figure to 50 million in the first quarter, as shares dropped into the teens in the wake of the collapse of Bear Stearns, and 80 million at July 31, when the price was below $10.</p>
<p>If the outlook for Freddie shares - which closed Friday at $5.10 but traded as low as $3.50 in the after-hours session when news of the Treasury plan began to circulate - is bleak, one ray of hope comes from the March collapse of Bear Stearns. Those shares were to be sold to J.P. Morgan Chase at $2 apiece in a Fed-brokered rescue of Bear, but the shares traded sharply above that level for a week, until the deal was renegotiated at $10.</p>
<p>“It’s hard to use stops when you are long 50 million shares.”</p>
<p>A mutual fund manager told me about the liquidity problem from his perspective at the institutional level compared to the retail trader. But you had to take a position with the average daily volume? I’ve done that too and we call them roach motels. Hard to say that about AIG though.</p>
<p>I have my own trading rules about average daily volume as I like to be able to make a quick exit.</p>
<p>One other thing is that I thought that most institutional traders didn’t like to make their book known lest it be gamed by other players.</p>