US Federal Reserve announces $600b stimulus

The economy's naturally and organically growing by itself. It'll be a roaring river in another couple of years because it's going to recover by itself. Why does the FED feel the need to inject another $600B stimulus into the banking system? It's can't for the purpose that they've stated. I know but I'm not telling. Boo.

Real Estate Listings on Youtube

   Did you know that real estate brokers use Youtube to showcase homes that they're selling? Well, it's true. The videos are usually between 1-2 minutes and allows viewers to look at the outside of the home as well as the inside. None of the videos get much traffic but they're a great way to hook a potential client if he/she needs more than a photograph in a brochure. One example from a few hours ago:

Citigroup's Toxic Mortgage Pipeline Could Mean Mammoth Put-Back Risks

From a CNBC article today:
http://finance.yahoo.com/news/Citigroups-Toxic-Mortgage-cnbc-2855256330.html?x=0&sec=topStories&pos=2&asset=&ccode=
   Investors have largely given Citigroup a pass when it comes to put-backs-an action where investors force banks to repurchase mortgages and the securities related to them. While Citi's rivals saw their share prices fall last month on put-back concerns, Citi's shares rose.

   Citi may be "the best in class" when it comes to mortgage put-back exposure. But it is hardly immune to put-backs. Keep in mind that put-back exposure does not arise from mortgages Citi itself owns. Instead, the put-back issue arises from mortgages Citi sold to others, either directly or as part of a pool of mortgages underlying a mortgage-backed security.

   Citi executives say there are $504 billion of these mortgages that it services but does not hold. (We call these the Serviced But Not Held Portfolio, or SBNH Portfolio for short.) These mortgages do not appear on Citi's balance-sheet.

   None of this matters. None of it. Citi will be allowed to survive and even thrive in the next upswing in the economy. All of the stories that you'll read about in the next few years about the mortgage market is noise. No one will care about any of the "toxic mortages," "robo-signers," "foreclosure mess," in a few years. All of the follies of the banks will be papered up, paid for by tax payers, and allowed to simmer down. This is how it's going to be, how it has been, and how it always will be. Welcome to the Republic.

Resource Based Economy AND EXAMPLE OF IGNORANCE

   I don't advocate what she says but her voice helped me sleep while I was at the office.

Ryland Shares - Update

   Last week, I mentioned that Ryland was my favorite housing stock. I also mentioned that I wasn't buying yet because I don't buy on weakness but on strength. When I wrote my post last week, Ryland shares were trading at around $16.50. Today, those shares are down to $14.98 because of a middling earnings report earlier in the week. From Reuters:

http://www.reuters.com/article/idCNN2812963920101028?rpc=44

Oct 28 (Reuters) - Shares of Ryland Group Inc (RYL.N) fell on Thursday, the day after the seventh-largest U.S. homebuilder reported a quarterly loss and a 37 percent drop in orders. Ryland shares were down 4.5 percent at $15.20 in midmorning trading on the New York Stock Exchange, compared with a 0.9 percent dip in the Dow Jones U.S. Home Construction Index .DJUSHB.

    The shares are off about $1.50 from last week. So, am I looking to scoop any shares up NOW? Not yet. As I've mentioned before and I'll mention it again in the future, I don't start a position on weakness. I know that the shares are a nice bargain now compared to last week but there's a chance that prices will be discounted further in the next 1-2 months. I'm a patient investor and my time horizon is usually a minimum of 5 years. I do have a price in mind where Ryland shares would be so compelling that I'd have to break my buying rule and start a small position. In general however, I'm looking to buy size in Ryland only on strength.

Foreclosure activity up across most US metro areas

   From an AP article today:

LOS ANGELES (AP) -- The foreclosure crisis intensified across a majority of large U.S. metropolitan areas this summer, with Chicago and Seattle -- cities outside of the states that have shouldered the worst of the housing downturn -- seeing a sharp increase in foreclosure warnings.

California, Nevada, Florida and Arizona remain the nation's foreclosure hotbeds, accounting for 19 of the top 20 metropolitan areas with the highest foreclosure rates between July and September, foreclosure listing firm RealtyTrac Inc. said Thursday.

Those states saw housing values surge during the housing boom years. When the boom ended, values collapsed and foreclosures soared.

   I feel like I'm beating a dead horse when I state that the "foreclosure crisis" won't be over for at least another 5 years and recovery in the real estate market won't arrive until 2018-2019. I know that seems like a long time but this is how financial crises work. They take time and they burn up huge amounts of wealth before they're contained. While the foreclosure crisis is resolving itself over the next few years, the economy will continue to get stronger and the stock market's going to go ballistic. The seeds of the next boom have already been planted and all it's going to take is time. Most people don't have the patience to wait nearly a decade for all this to happen but my advice is to continue working at your job (if you have one), invest monthly, take care of your family, and watch for the boom to happen right before your eyes.

Why Home Price Reports Are Irrelevant - CNBC

^^ The article title is correct but the content of the article by Diana Olick still doesn't get it. Let me state emphatically that ALL reports are irrelevant. You know why? They all rely on trailing/lagging data which is useless. Revisions are constantly done as well to these reports so what use are they? There is no use but we live in a world where people in power live and die by "data points" and ever changing information. They need to put the information in some sort of tabulated order and stamp an "official" inkstain on the data. It's all nonsense but that's the world we live in. If you want to read the article, here you go.

Owners seek short sales as banks push foreclosure

   The mighty American foreclosure machine is about to start cranking again in style and thousands of Americans are going to be kicked out of their homes. The banks are foreclosing on these homes because said Americans haven't paid their mortgages but a New York Times article this morning asks, "Why not short sales instead of foreclosures?" From the piece:

http://finance.yahoo.com/news/Owners-Seek-Short-Sales-as-nytimes-3208549596.html?x=0&sec=topStories&pos=7&asset=&ccode=
   Concerns about fraud are one of the reasons lenders are so careful about short sales. Sometimes well-off homeowners want to portray their finances as dire and cut their losses on a property. In other instances, distressed homeowners try to make a short sale to a relative, who would then sell it back to them (a practice that is illegal). A recent industry report estimates that short sale fraud occurs in at least 2 percent of sales and costs banks about $300 million annually. Short sales are also hindered when homeowners fail to forward the proper papers, have tax liens or cannot find a buyer.

   Banks are swamped with delinguent mortgages and the attendant foreclosures. When swamped in such a manner, large organizations such as BAC have to wade through the morass and attempt to move forward as efficiently as possible. The current firebomb attack method to push through foreclosures is the only way that banks can proceed and this is how it'll be henceforth. It's ugly but that's business. Nothing personal.

America Hates Wall Street

   A CNBC article from today reminds me that, "America Hates Wall Street" and one from the WSJ exhorts, "A new form of madness grips investors" which are about Americans' distaste for the stock market.

   These types of stories are indicative of the fear that still grips the American public when it comes to Wall Street. I guess it's understandable because during the 2007-2009 crash, the DOW dropped from 14,279.96 all the way down to 6,440.08. I traded through those days so I know there was irrational trading going on, lots of fear, and a feeling amongst the rabble that the end of America was upon us. Crazy right? Yet, here we are in 2010 and the Dow's recovered all the way to 11,113.91 but folks are still fearful.

   That's why po' folk will never get ahead. They should've been buying with both hands and both feet when the market dropped like a stone in 2008 - mom and pop investors should've been stampeding into the market when Pfizer was $11.62 on March 2009 and GE had dropped to $5.87. Yeah, I know GE is a hedge fund in drag (Thanks, Cramer) but c'mon now. GE has survived wars, turmoil, and recessions before and it's not going out of business.

   So yeah, the social class strata in America is going to stay the same for the next hundred years because of fear and greed. It's as simple as that. When the market dives, Joe Sixpack becomes fearful and sells near the bottom only to watch the market bounce back again. However, he doesn't buy when the market climbs - he stays out because of a fear of being whacked again. That's why Joe will never ever become wealthy or be rewarded by the market.

   Joe Sixpack will probably buy when the DOW's at all time highs in the next few years when prices are dear. A powerful bull market is upon us but the majority of American's won't benefit from what's coming because their fear outweighs their greed at precisely the wrong time.

Fannie and Freddie may need another $215 billion

   The black holes known as Fannie Mae and Freddie Mac continue to suck money into their nether regions like a pair of ravenous vortices without end. From today's Reuters article:

http://finance.yahoo.com/news/Fannie-and-Freddie-may-need-rb-2323937639.html?x=0&sec=topStories&pos=1&asset=&ccode=
   NEW YORK (Reuters) - Fannie Mae (OTC BB:FNMA.OB - News) and Freddie Mac (OTC BB:FMCC.OB - News) may need as much as $215 billion in additional capital from the Treasury through 2013 to offset losses and maintain a positive net worth, their federal regulator said on Thursday. Fannie Mae and Freddie Mac, whose programs fund the lion's share of all new home loans, are at the center of debate as Congress sets to overhaul a U.S. mortgage finance system that contributed to the worst housing crisis since the 1930s.

   The capital to support those two hulking disasters ultimately come from the American taxpayer. The wealth of the United States is created by working men and women who toil at their jobs and a good chunk of that will be going to fund Fannie and Freddie and keep them from imploding. I'm of the belief however that if that capital wasn't being used to keep F&F alive, it would be going to waste in another BIG program designed to destroy wealth and feed the wastrels. Remember Gravina Island Bridge aka "The Bridge to Nowhere" which was advocated by Representative Don Young and Senator Ted Stevens? That's the kind of waste and wastrel(s) I'm referring to.

   Continuing further into the Reuters article:
   "The cumulative capital needs of the two housing finance giants, which were seized by the government in late 2008, will likely fall between $221 billion and $363 billion through 2013, the Federal Housing Finance Agency estimated."

   Whenever I read a cost estimate preceded by the word, "likely," I automatically double the figure in my head so I'd pinpoint the total losses to be $750 billion when 2013 rolls around. Since I'm certain there's no housing recovery until 2018 or thereabouts, the total losses will probably reach $1.5 trillion when it's all said and done.