Saturday, December 08, 2007




Hold on!
BANKS across the United States, particularly the smaller ones, have become dependent on construction lending just as that area of the economy is weakening and the number of bad loans is growing.

Figures compiled by the Federal Deposit Insurance Corporation and released last week show that both midsize and small banks had construction loans outstanding that were greater than their total capital. A decade ago, such loans were equal to only a third of capital for those banks.

For most of this decade, that was a good strategy. Construction loans proved to be very profitable, particularly for smaller banks as competition from larger banks and securities markets eroded their position in areas like mortgage lending and credit card issuance.


My drive took me through some exurbs.


At Least The War Is Over

Over there.

On the outskirts of a city adjoining some of Iraq’s most lucrative oil reserves, a rivulet of urine flows past the entrance to the barren playing field.

There are no spectators, only 2,200 Kurdish squatters who have converted the dugouts, stands and parking lot into a refugee city of cinder-block hovels covered in Kurdish political graffiti, some for President Jalal Talabani’s Patriotic Union of Kurdistan.

These homeless Kurds are here not for soccer but for politics. They are reluctant players in a future referendum to decide whether oil-rich Tamim Province in the north and its capital, Kirkuk, will become part of the semiautonomous Kurdish regional government or remain under administration by Baghdad.


Under the Iraqi Constitution the referendum is due before Dec. 31. But in a nation with a famously slow political clock, one of the few things on which Kirkuk’s Kurdish, Arab and Turkmen communities agree is that yet another political deadline is about to be missed.

Suddenly everybody's constitution is stamped "optional".

Gloomy Gus

Such a downer.

Analysts at Credit Suisse Group estimate more than 30 percent of borrowers with subprime adjustable-rate mortgages are behind on their payments before their loans reset higher and 775,000 homes with $143 billion of mortgage debt will go into foreclosure through the middle of 2009. The forecast was made before Paulson's plan was disclosed.

``It'll be the biggest housing recession we've known,'' said Allen Sinai, chief global economist at New York-based Decision Economics Inc. ``Even if we figure this part of it out, we are not through it.''

Evening Thread

Nothing happens on Saturdays.

Walking Around Money

Works that way in Philadelphia. No reason it can't work that way in Iowa too.

Wanker of the Day

Bill Hamilton, who is spending the weekend on the fainting couch.

Fear the Feds

Our local crime couple could have big problems.

Law-enforcement sources said yesterday that the FBI, the U.S. Attorney's Office and the U.S. Postal Inspection Service have all launched separate investigations into the busted, so-called "Bonnie and Clyde" couple.

The new investigations - and the specter of possibly having to face stiffer federal charges - come at a time when the spirits of the formerly glamorous duo are likely at an all-time low.

Anderton, 25, and Kirsch, 22, were arrested Nov. 30 on charges that include burglary, criminal trespass and conspiracy.

They were arraigned on Thursday and sprung from fetid jail cells after their parents came to their rescue and posted 10 percent of their combined $235,000 bail.

Anderton returned to his family's home in Washington state, while Kirsch headed south to her father's home in North Carolina.

Rock Radio

I almost never listen to the radio as it's something I mostly only do when I drive and I don't drive very often. Spent some time listening to the basic rock radio station for awhile, with a mix of all the things they played when I was growing up and newer things. The Talking Heads came on, and it occurred to me that the station probably wouldn't play music by a band that sounded just like the Talking Heads if they were a new band.


And trapped under a cat.


The weather is depressing my brain.

UPDATE: because Ruth is shrill:
Increasingly, the commenters at all our blogs and at such public voice outlets as at WaPo are calling for the removal of the war criminals.

The crimes mount, and the popular voice is getting louder. I recall that in order to get civil rights legislation enacted, LBJ told the Rev. Martin Luther King that he should force LBJ to act, and that the outcry needed to be overwhelming.

What does it take to make the call for impeachment overwhelming?

Not Atrios

Morning Thread

Normal blogging to resume later today...

Are There Any Republicans Left?

And another one goes.

Friday, December 07, 2007

Friday Threading

Super Shitpile Super Small?

This has to be a typo.

Dec. 7 (Bloomberg) -- Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. established the ``SuperSiv'' fund, designed to bail out short-term debt markets, and named BlackRock Inc. as the manager, two people with knowledge of the plan said.

The banks also began marketing the fund to smaller institutions, aiming to raise $75 million to $100 million, including their own undisclosed contributions, said the people, who asked not to be named because details of the SuperSiv haven't been made public. The banks, the three largest in the U.S., are set to meet with potential contributors on Dec. 10.

Originally Super Shitpile was supposed to be a $100 billion fund, though later reports suggested it would be $50 billion. $75-100 million is chump change. The story has to be wrong. If not, it's hilarious.

122 Pages

A lot of foreclosures.

...adding, just realized the post linked is confusing tax with mortgage foreclosures. These are tax foreclosures.

War Criminals

As far as I've seen, no one in the media actually took note of the logical implications of what John McCain said in the recent debate:

McCain: Then I am astonished that you would think such a -- such a torture would be inflicted on anyone in our -- who we are held captive and anyone could believe that that's not torture. It's in violation of the Geneva Convention. It's in violation of existing law...

Silly Season

Normally I get pretty excited when Democrats take on the media, but this is just weird.

The Great Orange Satan

O'Reilly speaks the truth!


Over there.

BAGHDAD - A woman with explosives strapped to her body attacked the office of a Sunni group that had turned against al-Qaida in Iraq — one of two suicide bombings in Diyala province northeast of Baghdad that left at least 22 people dead Friday.

Idiot Vote

Pretty fascinating stuff coming from La Nooners.

Media Matters

From Jamison Foser.

Mitt Romney's America

No atheists allowed.

And since like any good liberal I desperately feel the need to pat the other side on the head when they do something good, this David Brooks column is pretty good.

The first casualty is the national community. Romney described a community yesterday. Observant Catholics, Baptists, Methodists, Jews and Muslims are inside that community. The nonobservant are not. There was not even a perfunctory sentence showing respect for the nonreligious. I’m assuming that Romney left that out in order to generate howls of outrage in the liberal press.

The second casualty of the faith war is theology itself. In rallying the armies of faith against their supposed enemies, Romney waved away any theological distinctions among them with the brush of his hand. In this calculus, the faithful become a tribe, marked by ethnic pride, a shared sense of victimization and all the other markers of identity politics.

In Romney’s account, faith ends up as wishy-washy as the most New Age-y secularism. In arguing that the faithful are brothers in a common struggle, Romney insisted that all religions share an equal devotion to all good things. Really? Then why not choose the one with the prettiest buildings?

Pietistic Autocrats


Please Kill Me

From an email:

Today ABC News announced Matthew Dowd as an ABC News Contributor. Below is his first post on Religion and Politics.
Matthew Dowd
A Man in the Middle Looks at the Whole Wide World of People and Politics
Faith: Finding An Authentic Place to Call Home

Overs Win

+94K jobs.

My God

Joe Klein now thinks destroying evidence and covering up war crimes is an example of "candor" and "coming clean."


Monthly jobs report comes out today. I'll take the traditional "under" bet - betting under the consensus forecast of 70K. I suspect I'll lose this one but will be vindicated by later downward revisions.

The War on Tiara


Judith Nathan got taxpayer-funded chauffeur services from the NYPD earlier than previously disclosed - even before her affair with then-Mayor Rudy Giuliani was revealed, witnesses and sources tell the Daily News...

Thursday, Giuliani aides changed their story. They said Nathan had received previously undisclosed "threats" earlier in 2000, and that protection was provided at those times.

They refused to provide dates, describe the nature of the threats or confirm - as witnesses and a law enforcement source now contend - that the protection began before she was publicly identified as the married mayor's girlfriend in May 2000.

That would make the threat justification all the more puzzling, because she wasn't a public figure.


Party on.

Thursday, December 06, 2007

An Evening Thread

For monotheism

Deep Thought of the Day

In Mitt Romney's America, you're free to worship anyone you want as long as it's Jesus Christ, or maybe his Dad.


Not a plan.

Anyway, I was listening to NPR replay bits of Bush today he sounded sloshed.

Have your Credit Card Standing By...

Bush gave out the wrong number for the Bad Mortgage Big Shitpile Hotline. He said, "1-800-995-HOPE", which is wrong.

He should have said "1-800-382-5968", still would have been wrong, but it would have been appropriate.

Fresh Thread

On the road for a couple of days, so posting may be a bit sporadic.

New Religion

This kind of intolerant horseshit is basically gibberish, but since words mean things let's try to figure out the implications of what Mitt's saying.

It's as if they are intent on establishing a new religion in America - the religion of secularism. They are wrong.

Really it would just be crazy if anyone tried to start a new religion in America... oh, wait.

We Were Warned

Because 2 screwed up wars aren't enough.

HOLLYWOOD -- The latest National Intelligence Estimate concluding that Iran discontinued its nuclear weapons program four years ago has claimed one casualty: CNN has postponed speculative documentary "We Were Warned -- Iran Goes Nuclear."

The two-hour spec, which was slated for Dec. 12 under the "CNN Presents" banner, was "set partially in the future," featuring a what-if scenario as former government officials -- playing fictional cabinet members -- debate how to deal with the Iranian threat.

That special was "based on a different set of rules and a different set of conditions," said CNN veep-senior exec producer Mark Nelson, noting that the surprising NIE report "changed everything."

In its place, CNN will this weekend air two Campbell Brown-hosted specials on the Iran situation and its history. Portions of "We Were Warned" correspondent Frank Sesno's original reporting will be incorporated into those hours, which air Saturday and Sunday.

Still Wanking

Is it possible for Joe Klein to admit error at all? He could just say:

I misspoke, which is easy to do on live radio or television.

You know where to find it...


It's completely appropriate that Mitt was introduced by George HW Bush, the man who once said:

No, I don't know that atheists should be regarded as citizens, nor should they be regarded as patriotic. This is one nation under God.

to give a speech which included the line "freedom requires religion."

Much of the time it seems that atheists are the only people who understand that importance of religious freedom, and for that we get accused of being hostile to it.

Quite a Haircut

20 cents on the dollar... awesome

Dec. 6 (Bloomberg) -- U.S. mortgage assets in collateralized debt obligations have lost so much value that the top classes of the securities may be worth as little as 20 cents on the dollar in the event of liquidation, Barclays Plc analysts said in a report.

About 20 percent to 30 percent of principal would be covered for the ``super senior'' portions of mezzanine asset-backed bond CDOs, which mainly contain mortgage bonds and other CDOs initially assigned low investment-grade ratings, New York-based analysts Joseph Astorina, Elena Warshawsky and Wei-Ang Lee wrote yesterday. The senior-most classes of CDOs containing highly rated asset- backed bonds would recoup 30 percent to 65 percent, they wrote.

Wanker of the Day

Joe Klein.

Sign of the Times



Not good.

Dec. 6 (Bloomberg) -- The number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter as borrowers were unable to refinance or sell their homes.

The share of all home loans with payments more than 30 days late, including prime and fixed-rate loans, rose to a seasonally adjusted 5.59 percent, the highest since 1986, the Mortgage Bankers Association said in a report today. New foreclosures hit an all-time high for a second consecutive quarter.


One in every five adjustable-rate subprime loans had late payments in the quarter, a number that excludes the one of every 10 already in foreclosure, the trade group said. Foreclosures started on all types of mortgages rose to an all-time high of 0.78 percent from 0.65 percent.

Happy Iraq Study Group Day

It was just one year ago today that the Iraq Study Group report was released. What would we do without bipartisan commissions of elder Villagers to save us?

Or a media to tell us what it all means.

Approximately 980 US troops have been killed since the world-changing report was released.

Not Gonna Do Anything

CNN's telling me what the great mortgage rate freeze program will do.

People who qualify:

  • have an income and live in their homes
  • are currently making their payments on time
  • would default if their interest went up

  • ARM mortgage has to have been taken between 1/05 and 7/7
  • Has a rate reset between 1/8-1/10
And you don't qualify if:

  • have missed payment
  • can afford mortgage rate increase
  • don't have an income
  • own homes which are worth less than their mortgage
The last one is the kicker, as it kicks out the class of people who might actually be able to refinance on their own.

I became increasingly skeptical that such a broad-based bailout would be workable for various reasons, but as is usually the case with anything the Bush administration gets involved in, they aren't even really trying.

Morning Thread

In which Mitt Romney turns into a jelly doughnut.

--Molly I.


Hard to imagine life before the internets.


Best essay will receive a free lifetime subscription to Eschaton.

Wednesday, December 05, 2007

Deep Thought of the Day

I hope that some day my advertisers (all of them fine people, especially Chevron) realize that the best way to get people to click on an ad is to put a picture of a pretty person in it.

Would You Like An SUV With That McMansion?

And now we have little shitpile.

Delinquencies in the auto-loan market are ticking up to their highest level in several years. Lenders are tightening terms in some cases, and interest rates have risen from the rock-bottom levels of a few years ago. About $575 billion in loans for new and used cars are made annually, according to the National Automotive Finance Association.

About 4.5% of auto loans made in 2006 to top-rated borrowers were at least 30 days delinquent as of the end of September, up from 2.9% the previous month, according to a Lehman Brothers survey of companies servicing these loans. That is the biggest one-month jump in at least eight years. Lehman says 12% of subprime borrowers, who have poorer credit records, were delinquent on their 2006 auto loans as of September. That is the highest level since 2002 and up from 11.1% the previous month.

I was about to write that the auto loan industry wasn'y playing the same shenanigans with auto loans so that while this was reflective of broader problems with the economy it wouldn't necessarily be a cause of additional problems.


Many auto loans undergo the same Wall Street financial engineering as the mortgage loans that stand at the center of the credit crisis, making this a potential issue for investors. Auto loans often are bundled together into securities, sliced and diced into pieces with varying levels of risk and return, and sold to investors around the world.

In 2006, $89 billion of auto loans were packaged into asset-backed securities and sold to investors, according to Standard & Poor's, making it the biggest asset class for such securities next to mortgages and credit cards. That tally doesn't include certain other types of securities backed by car loans. The market is now slowing. Deutsche Bank estimates such bundling was down to $69 billion during the first 11 months of this year, a 19% drop from the same period last year.

A much smaller shitpile, but a shitpile nonetheless.

Late Night Thread

Joe Klein do anything stupid while I was out?

Evening Thread

You can't say I, Atta J. Turk, don't do the least amount possible for you people on my occasional guest posts.

Now, remember me with your seasonal PayPal opposed to those in need.


What the hell is Cliff May doing on my TV?

Evening Thread

Out for dinner and a show.

"Regurgitate Exactly"

Dan Bartlett on the right wing blogosphere.

Problems for Big Shitpile

Bond insurer ACA Capital, which declined 24% yesterday, went down 40% today.

(ht reader c)

Jesus Came First

The thing is, this isn't just religion-influenced ignorance of history and pre-history, it's crackpottery influenced ignorance of religion itself.

Even young earth creationism thinks there were a few things about before Jesus showed up.

Capital Shortfall

Yesterday I suggested that Shitpile was unfolding like a game of Jenga, with a piece being pulled out every day as everyone holds their breath hoping it isn't the piece that causes the whole pile to come down. The interlocking financial system has a lot of discrete triggers, which makes it difficult for things to unwind gently. There are too many potential "nuclear events," where, for example, the downgrading of the ratings of a bond insurer causes a downgrade of everything they insure, which in turn mandates sales by funds which can only carry "high quality" assets, which erodes the price of those assets, etc... etc...

Dec. 5 (Bloomberg) -- MBIA Inc. is ``somewhat likely'' to face a capital shortfall, throwing its AAA credit rating in jeopardy and putting at risk the rankings of the state, municipal and corporate debt it guarantees, Moody's Investors Service said. The shares tumbled as much as 16 percent.

A review of MBIA, the largest bond insurer, will be completed within two weeks, Moody's said in a statement today. Moody's said additional scrutiny of the Armonk, New York-based bond insurer's mortgage-backed securities portfolio caused it to revise its assessment.

``The guarantor is at greater risk of exhibiting a capital shortfall than previously communicated,'' Moody's said. ``We now consider this somewhat likely.''

Tag Clouds

I've never quite understood the point, but this was sort of creepily funny.


Conyers on Klein.


One joy of the Huckabee campaign is that it provides an opportunity for the liberal media to finally tell you the story they never bothered to during the 90s - just how batshit insane Clinton haters were.

I've hit the Dumond story many times on this blog. Murray Waas has some additional revelations.

As governor of Arkansas, Mike Huckabee aggressively pushed for the early release of a convicted rapist despite being warned by numerous women that the convict had sexually assaulted them or their family members, and would likely strike again. The convict went on to rape and murder at least one other woman.

Confidential Arkansas state government records, including letters from these women, obtained by the Huffington Post and revealed publicly for the first time, directly contradict the version of events now being put forward by Huckabee.


"There's nothing any of us could ever do," Huckabee said Sunday on CNN when asked to reflect on the horrific outcome caused by the prisoner's release. "None of us could've predicted what [Dumond] could've done when he got out."

But the confidential files obtained by the Huffington Post show that Huckabee was provided letters from several women who had been sexually assaulted by Dumond and who indeed predicted that he would rape again - and perhaps murder - if released.

Dumond was let go because right wing lunatics believed that Bill Clinton sent his goons to castrate an "innocent" man because one of his "alleged" victims was a distant relative. That this story was, you know, pretty much insane didn't stop it from getting regular play in the conservative press.

They Whine About Everything

As Boehlert notes, conservative bloggers were mad when they believed that Democrats asked questions at a Republican primary debate. Before that they were mad that Democrats asked questions... at a Democratic primary debate.

Where's Slummy Joe?

The Last Honest Man, the Savior of Washington, Joe Lieberman is apparently rather negligent in his role as the Chairman of the Homeland Security and Government Oversight Committee, which as his website helpfully informs me:

is responsible for oversight of the Department of Homeland Security and assuring the efficiency and effectiveness of the Federal Government.

Slightly Smarter Moustache

While Friedman's column is a bit better than usual, I can't quite agree with Will that he's hit one out of the park. The column does contain the phrase "Social Security deficits" which, you know, don't exist.

Homeless Puppies

And another.

Jeffrey Ray Nielsen—the well-connected Orange County conservative activist who claimed the so-called liberal media, specifically the Weekly, was out to get him by publishing a series of exposés on his pedophile activities—is expected to finally admit tomorrow that he used two boys for sex since 1994, according to law-enforcement sources.

A legal representative for Nielsen, who has extensive personal ties to Congressman Dana Rohrabacher and Orange County Republican Party boss Scott Baugh, told prosecutors early last week that Nielsen would plead guilty to two felony counts: committing lewd acts on a child under 15 years old and committing lewd acts on a child under 14 years old.


When police arrested Nielsen, a prominent GOP activist at the time, TheOrange County Register failed to tell its readers. In fact, the paper—some of whose staffers enjoy cozy relationships with local GOP leaders, including Rohrabacher and Baugh—waited more than three years to mention Nielsen’s arrest. Worse, while Nielsen awaited trial for molesting the Westminster boy, the Register’s Richard Chang helped to bolster the accused pedophile’s reputation in the community. In an article, Chang didn’t mention the charges, but rather praised Nielsen for volunteering to help homeless puppies from the Katrina disaster in New Orleans.

Can I Still Go?

I wouldn't mind some free food and drinks at Tinto.

JOCELYN SARAH Kirsch had planned to throw a 25th birthday party tonight at an upscale Rittenhouse Square eatery for her live-in love, Edward Kyle Anderton.

"If you're in town, please join us at Tinto tapas bar for some suprise-birthday drinks and desserts around 10pm," wrote the Drexel University senior to her pals.

To which she added: "(MY treat, of course!)"

Actually, it was courtesy of some of their unknowing neighbors, whose identities the couple allegedly stole from inside their Belgravia condos, on Chestnut Street near 18th, part of their alleged $100,000 crime spree.

But the daring duo - now all over the national news media - won't be attending the party, because they'll instead be spending the night in the clink.


For legal reasons, basically every group in Washington which isn't organized for the purpose of electing federal candidates is officially "non-partisan," but it's still a misleading adjective to use in a news story in most cases.

Can't Get the Spot Out, Peter

Peter Beinart, who should take the advice of the King of Spain:

The candidates mentioned the war, to be sure. But it never took center stage. And with the first primaries just weeks away, that's become the norm: Iraq wasn't a major focus at last week's Republican YouTube debate either. In the biggest surprise of the campaign so far, the election that almost everyone thought would be about Iraq is turning out not to be. And that explains a lot about which candidates are on the rise and which ones are starting to fall.

The reason Iraq is fading is simple: Not as many people are dying there. Fewer deaths mean fewer front-page stories, and fewer front-page stories mean less discussion on the cable shows, which were pretty sick of the topic already. Turn on the television these days, and you're more likely to think America is at war with illegal immigrants than with insurgents in the heart of the Middle East.

And that's showing up in the polls. Between June and November, according to NBC and the Wall Street Journal, the percentage of Americans citing Iraq as their top priority fell eight points. A Post survey recently reported a six-point decline since September. When a CNN/WMUR news poll asked the same question of likely New Hampshire voters last month, it found that the percentage of Republicans citing Iraq had dropped 14 points since June. Among Democrats, the drop was 16 points.


Iraq could make a political comeback, or it could be supplanted by another frightening post-Sept. 11 topic such as Pakistan or Iran. But right now, it's the biggest non-story of the campaign. No wonder Mike Huckabee is smiling.

Poll out today:

WASHINGTON — Growing anxiety over the economy, health care and immigration rival Iraq as the central issues in the presidential campaign, shifting an election landscape once dominated by the war.

In a USA TODAY/Gallup Poll taken Friday through Sunday, the Iraq war still tops the list of issues cited as most important. It's raised twice as often as the next-ranking issue, the economy. In April, however, the war was cited three times more than any other issue.

The Village is desperate to push Iraq under the rug, to pretend it didn't happen, and most importantly to pretend that no one cares. There is some relative decline in the importance of Iraq, but only Villagers could imagine the issue which is "raised twice as often as the next-ranking issue" as the most important as a "non-story" in the campaign.

More Marks for Big Shitpile

Orange County goes another round.

Dec. 5 (Bloomberg) -- Orange County, California, bankrupted in 1994 by bad bets on interest rates, bought structured investment vehicles similar to those that caused a run on funds invested by local governments in Florida.

Twenty percent, or $460 million, of the county's $2.3 billion Extended Fund is invested in so-called SIVs that may face credit-rating cuts, said Treasurer Chriss Street. In all of its funds, the county holds a total of $837 million of SIV debt, including $152 million in its $3.5 billion of money-market funds that isn't under ratings review, said his spokesman, Keith Rodenhuis.


...The Orange County Glibertarian Register takes the sunny view:

The credit crunch has taken a tiny bite from Orange County's investment pool.

Treasurer-Tax Collector Chriss Street said Tuesday he discounted 17 county-owned securities by nearly $14 million after a ratings agency warned it might downgrade the securities.

The discount amounts to less than half of 1 percent of the $6 billion pool. So far the discount exists only on the county's books. If Street can avoid selling the securities he should eventually get full value for them.

Street said he doesn't plan to sell the securities because "there's no need. … These investments are still rated triple-A," the highest possible rating.

Triple-A, baby!

...and this tidbit:

"We didn't think they paid enough for the risk," said Josh Anderson, a Pimco expert on the securities.

Pimco has bid on assets held by some troubled structured investment vehicles, Anderson said, and "they aren't pretty."

Pimco's willing to put a price on and scoop up some of big shitpile. Who will take the offer?

Because Everything She Touches Turns to... Gold?

The NYT editorial board actually means this seriously.

Yesterday, Mr. Bush insisted that he believes in a carrot-and-stick approach. But he has yet to make a serious offer of comprehensive talks and real rewards if Iran is willing to give up its fuel program and cooperate fully with inspectors. He is going to have to send someone a lot higher ranking than the American ambassador in Baghdad to deliver the message. We suggest Secretary of State Condoleezza Rice for the job.

Our elite discourse is filled with fools.

Crazy People

Remember: to some the fact Iran isn't pursuing nuclear weapons - supposedly the Scariest Possible Thing Evah - is bad news.

Morning Thread

Tuesday, December 04, 2007


In honor of Bill O'Reilly's War on Chanukah and War on Christmas Spirit, I recommend you light a candle and make some latkes.

Not Atrios


Joe Klein and Rick Stengel have yet to call me and personally apologize for being the complete douchebags they are so I guess I'll start a thread for people.

Fresh Thread

Out for a bit.

No One Could Have Predicted

That so-called "liar loans" wouldn't perform very well.

DANA POINT, Calif., Dec 4 (Reuters) - Expected losses for troubled mortgages known as Alt-A loans are now more than double earlier forecasts and losses for subprime bonds originated in 2006 may climb to 20 percent or more, analysts said on Tuesday.

Moody's Investors Service on Tuesday raised its forecast for expected losses for U.S. mortgages known as "Alt-A" residential mortgage debt. Loss estimates for Alt-A bonds reviewed by Moody's increased by an average of 110 percent from initial expectations, with some loss estimates up by as much as 270 percent, Moody's said in a report.

Alt-A mortgages are made to borrowers with credit scores above subprime but who have other risky attributes, such as no proof of income or lack of an equity stake in the property.

The "liar loan" term may be a bit harsh. People who get these kinds of things are often self-employed and aren't necessarily deliberately distorting their annual incomes. But without any serious underwriting there just isn't any way to determine if these people have a genuine ability to pay.

If I felt the need to coin a more family friendly term than "Big Shitpile" to describe what's going on, I might call it "Jenga."

Wanker of the Day

Rick Stengel.

Look Out Below

A couple of weeks ago I wrote:

ACA's where Big Shitpile would pretend to shift a big bunch of risk so they could grow their shitpiles ever higher while pretending everything was fine. If ACA goes under, all that risk goes on their books and the shitpile does come a tumbling down.

Essentially financial institutions had been dumping all their risk on ACA which was providing "insurance."

While there's no new news out about ACA, their stock plunged 24% to 54 cents today, giving them a market cap of 18.9 million. ACA insures about "$70 billion" of Big Shitpile and other assorted piles.

They Don't Know Anything About Anything

The complete absurdity of our modern system of punditry.

Not Subprime

As Big Shitpile continues to pretend this isn't happening.

A large part of E*Trade’s basket of assets was securities backed by high-quality mortgages — loans to homeowners with strong credit ratings and reasonably large equity cushions. That could raise troubling questions on Wall Street about the true value of “prime” mortgage assets, especially when they need to be liquidated in a hurry.

The picture becomes clearer when you look at this breakdown, which E*Trade shared with investors in October. It shows that more than $1.35 billion of E*Trade’s asset-backed portfolio consisted of prime, first-lien residential mortgages rated “AA” or better — hardly toxic sludge by any stretch of the imagination.

So consider this: Even if E*Trade got nothing — not a cent — for anything but these top-quality mortgage securities, it still sold $1.35 billion in prime mortgage assets for $800 million, or less than 60 cents on the dollar.

Fresh Thread


Mad Pursuit of the Presidency

While hunting for something unrelated, I came across this old Richard Cohen reminding us that once upon a time Bill Frist was thought to be a likely successor to Bush.


Who's The Next Hitler?

As Glenn shows us, the useful idiots who dominate our discourse can be convinced based on no evidence that there's some Very Scary Person with the means and intent to destroy the most powerful country in the history of the universe (us).

Whether these people are psychologically broken, tools of military-media-industrial-complex, or just plain stupid I really couldn't say. But collectively they're responsible for the deaths of hundreds of thousands of people. How they sleep at night I do not know. Maybe I'm psychologically broken for thinking that if I'd actually cheered on the Iraq debacle then I might feel a wee bit bad, or at the very least feel the need to follow the advice of the King of Spain.*

But an enemy must be found.


Princeton, N.J.: Obviously not everyone in the media should resign, but it is annoying to having The Post (and others) regularly publish articles by those who were wrong, wrong, wrong, but those who were right about Iraq (e.g. Feingold) still get short shrift.

Thomas E. Ricks: Yes, I agree with you. There are a few people out there who should have the decency to follow the advice of the king of Spain.

Marks Everywhere

While the dumping of big shitpile into municipal pension funds probably won't have happy results, it's at least valid for longer term investment funds like those to have some riskier assets in them. Completely shitty assets with indeterminable risk, no, but riskier assets yes.

But the short term pools like the Florida fund shouldn't have been anywhere near this stuff. In addition, they might end up biting Big Shitpile in the ass. Big Shitpile is desperate to keep pretending that this stuff is actually worth something even though no one wants to buy it. They're also desperate to make sure no one is selling this stuff, or to claim that the price realized from any actual transaction is perceived as being the result of the transaction being a forced sale. In other words, no market transactions mean the price is unknown. Actual market transactions are somehow not representative due to peculiar circumstances.

But if these funds start selling in order to meet obligations...

The same clock is ticking for every state in the country where school districts and cities and towns put their faith in someone else, usually at the county or state level, to manage their money.

What's It Worth?

This means, I think, most of them.

Of course, that's the problem with Muniland in general: Nobody ever really knows precisely what's going on when a crisis like this hits. There might be as many as 100 pools like this across the nation, with assets of something like $200 billion.


Got that? Neither do I. Let me try this again. These state and county-sponsored pools invested in highly rated short-term securities that were subsequently downgraded really fast or even went into default because of the subprime disaster.

When word somehow gets out that the pools own this stuff, either because the pools themselves 'fess up or because some enterprising reporter drags the information out of them with open-records requests, pool participants withdraw their money.

If enough participants withdraw, the pools will have to sell some of that stuff that nobody can figure out what it's worth. You can bet that Wall Street, which packaged and sold the stuff in the first place, isn't going to offer 100 cents on the dollar for it.

Tip of the Iceberg

Over the coming months we'll see pension board after pension board make trips to the confessional.

Dec. 4 (Bloomberg) -- Florida's pension fund owns more than $1 billion of the same downgraded and defaulted debt that sparked a run on a state investment pool for local governments and forced officials to freeze withdrawals.


``These were highly inappropriate investments for taxpayers' money,'' said Joseph Mason, a finance professor at Drexel University in Philadelphia. ``This is the tip of the iceberg for pension funds. We know the paper is sitting there. There are substantial subprime-related losses that haven't shown up yet.''



Crazy People

About 13 months to go.

However, the new NIE will make it harder for proponents of military action against Iran to argue their case.

One source, who has close links to US intelligence, said that members of Vice President Dick Cheney's staff continued to call for military strikes against Iran "on a daily basis".

It must be understood that since our intelligence agencies don't believe Iran has a nuclear weapons program, it also means that they don't know where such a program would be physically located if it did exist. This means that any desires of Dick Cheney and his people to bomb Iran simply involve... bombing the shit out of Iran.

Morning Thread

I'm going to do what any sane person does on a snow day: go to bed and read.

--Molly I.



Monday, December 03, 2007

Fresh Thread

Darth Vader is Sylar's father.


Evening Thread

KLo will be so happy! Big Love is back in reruns!

--Molly I,


Fun in the Inland Empire.

Unable or unwilling to sell their homes at declining prices, homeowners in Riverside and San Bernardino counties are converting them to rentals, glutting the market and causing rents to fall for the first time in years, according to Inland property managers.

Among the new landlords are investors who bought houses at peak prices and have watched their equity evaporate or homeowners who have relocated, leaving behind a house they can't sell.

There are so many Inland homes for sale, that even if no more come on the market, it will take more than two years to sell the houses available, according to the California Association of Realtors.


Denver said today a $300,000 house purchased with a 7 percent down payment would likely require a monthly mortgage payment of $2,500. The same house, he said, can be rented for $1,300 a month, "and the owner has to do the repairs."

(via hbb)





Fresh Thread


CNN Caption


Oh Lordy, about 30 seconds later:


Screwing Up


I suspect they will just drag out their old tried and true tropes against against the intelligence agencies, perhaps even start up a new Team B project. In fact, they'll likely have to dredge up how the CIA supposedly screwed up the Iraq WMD assessment, in which case we should bring out the Orville Reddenbacker. It should be quite a show.

The "they" are Iran hawks.

Howie Kurtz provides:

Anonymous: New York Times, right now: "Breaking News 12:06 PM ET: U.S. Report Says Iran Halted Nuclear Weapons Program in 2003." This should be interesting. "Iran halted its nuclear weapons development program in the fall of 2003 under international pressure but is continuing to enrich uranium..." (AP, Dec. 3)

Howard Kurtz: I would just make a note about the attribution in the lead: "senior intelligence officials said Monday." They may well be right. But some intelligence officials were obviously flat wrong about Saddam's WMD.

Hating Primary Season

I think this provides some justification for that feeling.

Marks in Connecticut

Big Shitpile strikes again.

Connecticut Investments

Connecticut's Short-Term Investment Fund, which invests cash for state agencies and municipalities, is holding $300 million in debt issued by SIVs that may be downgraded by Moody's. The state's $5.8 billion fund held notes issued by SIVs affiliated with Citigroup as of Sept. 30: Beta Finance, Dorada Finance and Five Finance, according to its most recent quarterly report.

Connecticut also holds $100 million in defaulted SIV notes issued by Cheyne Finance.

Lewis, a member of the Legislative Audit Committee in Montana, questioned whether the state board's policy of allowing pool participants to remove their money at full value, which concentrates the risk among those with money still entrusted to the pool. The majority of the money in the pool belongs to state agencies.


According to the Swamplanders, this is good news for Republicans. As would be, presumably, the opposite news.

And on and on...

...okay, not quite. Joe thinks it's good for Democrats because whenever foreign policy matters they lose.

Jay thinks this will allow conservatives to say "Bush! Was! Right!" and declare victory.

Joe doesn't seem to understand that Democrats now do as well or better than Republicans in polls on most national security issues.

Jay doesn't seem to understand that conservative bloggers want war with Iran, not a diplomatic victory.

Good Neighbors


Kirsch, 22, and Anderton, 25, both of Chestnut Street near 18th, were arrested Friday on charges of stealing some of their neighbors' identities and establishing credit lines in their names.

The duo also burglarized at least two of their neighbors' apartments and, police allege, they then faked Georgia state driver's licenses so they could open credit card accounts.

Anderton and Kirsch were charged with identity theft, conspiracy, unlawful use of a computer, forgery and a slew of other offenses, said Lt. George Ondrejka of Central Detectives.


In one instance, Kirsch allegedly tried to pass a phony $1,700 check to pay for hair extensions at Giovanni & Pileggi salon, at 17th and Walnut streets.

Cops said the couple trotted the globe, furnished their apartment and bought the latest in electronics with their newfound credit.

They traveled to Paris, Hawaii, and Turks & Caicos Islands, Ondrejka said.


When the phony $1,700 check for hair extensions was refused, someone at the salon tried to contact Kirsch by phone, then with a text message, to which Kirsch allegedly replied:

"Hello. You don't know my name, but I know yours. I also know your nice place on . . . Street and how you get home at night. You're the one who should be worried."

The couple also had copies of the mailbox keys of every resident at Belgravia Condos, 1811 Chestnut, and copies of door keys to about 30 percent of the building's apartments, the police source said. Police also found a picklock set.

CIA To Dick Cheney: Suck. On. This.


WASHINGTON, Dec. 3 — A new assessment by American intelligence agencies concludes that Iran halted its nuclear weapons program in 2003 and that the program remains on hold, contradicting an assessment two years ago that Tehran was working inexorably toward building a bomb.

The conclusions of the new assessment are likely to be explosive in the middle of tense international negotiations aimed at getting Iran to halt its nuclear energy program, and in the middle of a presidential campaign during which a possible military strike against Iran’s nuclear program has been discussed.

The assessment, a National Intelligence Estimate that represents the consensus view of all 16 American spy agencies, states that Tehran’s ultimate intentions about gaining a nuclear weapon remain unclear, but that Iran’s “decisions are guided by a cost-benefit approach rather than a rush to a weapon irrespective of the political, economic and military costs.”

Wanker of the Day

K. Lo.


NYT breaking:

Breaking News 12:06 PM ET:
U.S. Report Says Iran Halted Nuclear Weapons Program in 2003

Over Yet?

I admit I really don't care about what Clinton said about Obama, and what the Obama camp responded with, and what the latest Iowa polls say, blah blah blah.

Perhaps Not

Okay, here's Paulson's speech.

Given the local nature of housing markets, state and local solutions can be particularly effective. Current law allows states and localities to issue tax-exempt bonds only to assist first time homebuyers or homebuyers in designated distressed areas. Some states' housing agencies have initiated pilot programs, backed by taxable bonds, to help refinance struggling subprime borrowers into more affordable mortgages.

Today, we are proposing to allow state and local governments to temporarily broaden their tax-exempt bond programs to include mortgage refinancings; if enacted, this will reduce the cost of innovative mortgage programs and allow these programs to reach more struggling homeowners.

My interpretation of how this was covered on CNBC wasn't really correct. I had thought they were talking about mortgage-backed securities and not municipal bonds. I don't have an opinion on whether or not this is a good idea, but it isn't a direct bailout of big shitpile.


I do not think that word means what CNBC thinks it means:

A major setback for Venezuelan dictator Hugo Chavez. Venezuelans narrowly rejected his bid to run for re-election and to accelerate his socialist revolution.

And The Other Shoe

I must've missed this in his speech - was only half paying attention - CNBC:

We hear this plan coming out from Treasury Secretary Hank Paulson, trying to broaden the tax-exempt bond status for more mortgage related securities. What's your take on this? Mark [co-host] and I are debating how this all eventually goes back to the taxpayer.

And the bailout of Big Shitpile begins.


I always find Hugo Chavez to be a somewhat annoying subject because he's neither the Satanic Hitler as reflected universally in our media (and it's really creepy how much he's distorted) nor the Great Savior Of The Left. He's a left wing populist with an authoritarian streak, but no matter what they say it's "left wing populist" which makes the Villagers froth, not the authoritarian part. There are plenty of dictators around the world which get respectful treatment from our media, and the anti-Democratic authoritarian actions of our own president disturb them not at all.

But, in any case, it seems the dictator lost an election. Strange dictatorship indeed.

Anyway, watching US media coverage of Venezuela makes me realize that US coverage of foreign affairs is utterly corrupted by something. Still paying the piper. Who can forget this Orwellian NYT editorial?

Published: April 13, 2002

With yesterday's resignation of President Hugo Chávez, Venezuelan democracy is no longer threatened by a would-be dictator. Mr. Chávez, a ruinous demagogue, stepped down after the military intervened and handed power to a respected business leader, Pedro Carmona. But democracy has not yet been restored, and won't be until a new president is elected. That vote has been scheduled for next spring, with new Congressional elections to be held by this December. The prompt announcement of a timetable is welcome, but a year seems rather long to wait for a legitimately elected president.

After Chavez was elected in 1996 and re-elected in 2000, the New York Times cheers on a military coup which installed "a respected business leader" and hails it as a move signaling "democracy is no longer threatened."

They backpedaled from this editorial after the fact, but likely only because the coup didn't take and Chavez was returned to power.


Angelo Mozilo, CEO of Countrywide, on the only 3 reasons people default (on CSPAN).

Loss of health, loss of marriage, loss of job.

ha ha, tell me another one.


God and Nature decided that home prices would go up forever!

Recently I consulted for a "short sale" on a waterfront single-family home in Cape Coral. The lot was purchased in 1987 for $11,000 and sold in 1999 for $26,000. This 7.42 percent compounded annual rate of appreciation was normal.

In 2001 the lot owners built a house, which they sold in November 2005 for $700,000. It then "flipped" in April 2006 for $1.2 million and again in October 2006 for $1.9 million. This was NOT normal.

Today, the fair market value of that property is approximately $500,000. Using the historic annual compound appreciation of 7.42 percent, it will take almost 19 years for this $500,000 property to be worth $1.9 million again. But remember, that $1,900,000 final sales price was artificial, driven by speculation and not genuine demand.

Not Just Subprime

It's everybody.

One common assumption about the subprime mortgage crisis is that it revolves around borrowers with sketchy credit who couldn't have bought a home without paying punitively high interest rates. But it turns out that plenty of people with seemingly good credit are also caught in the subprime trap.

An analysis for The Wall Street Journal of more than $2.5 trillion in subprime loans made since 2000 shows that as the number of subprime loans mushroomed, an increasing proportion of them went to people with credit scores high enough to often qualify for conventional loans with far better terms.

In 2005, the peak year of the subprime boom, the study says that borrowers with such credit scores got more than half -- 55% -- of all subprime mortgages that were ultimately packaged into securities for sale to investors, as most subprime loans are. The study by First American LoanPerformance, a San Francisco research firm, says the proportion rose even higher by the end of 2006, to 61%. The figure was just 41% in 2000, according to the study. Even a significant number of borrowers with top-notch credit signed up for expensive subprime loans, the firm's analysis found.

Morning Thread

What do you mean no f@$*&ing snow day?


Sunday, December 02, 2007

Big Shitpile

Krugman's take.

Late Night


The Physical Side of Big Shitpile

Land prices falling, and homebuilder is desperate for cash.

Home builder Lennar Corp. has sold about 11,000 home sites to a venture mostly owned by the real-estate arm of Morgan Stanley for $525 million, a large land sale that signals that investors have begun to pounce on bargain deals.

The sites -- located in 32 communities in many areas hit hard by the housing downturn -- were valued on Lennar's books at $1.3 billion, as of Sept. 30.

I don't have a Fox News Journal subscription, so I don't know where the lots are. That's about $47K each.


A little dial-up rescue. I got nothin', I've been playing with online Advent calendars all day. (Yeah, the links are at my place if you're into that.)

Not Atrios


Time just sent me an email telling me that Mitt Romney is going to give a speech on Thursday announcing that he's becoming a Southern Baptist about religion.

Oh boy.

Sunday Afternoon Open Thread


Perhaps a personal gift to the state of Florida.

A government money market debacle unfolding in Florida is raising questions about former governor and presidential brother Jeb Bush's possible involvement in the mess.


A majority of this paper was sold to SBA by Lehman Brothers (nyse: LEH - news - people ). Bush, as the state's top elected official, served on a three-member board that oversaw the SBA until he retired as governor in January. In August, Bush was hired as a consultant to the bank. Lehman spokesperson Kerrie Cohen, speaking on behalf of Bush, said they had no comment and would not say when the bank had sold Florida the paper. SBA did not return calls.

While SBA wouldn't confirm, Bloomberg reported the amount of debt in default is around $900 million.

Edward Siedle, a former Securities and Exchange Commission attorney who investigates money management wrongdoing and has worked on behalf of several Florida public pension funds, thinks this is just the tip of the iceberg. He expects problems with defaulting debt to crop up in public funds across the country, especially in states with disclosure laws weaker than Florida's.

Don't know if Siedle has information or if he's just making a guess, but I too suspect that the last gasp of Big Shitpile involved finding marks in state and local governments.


This story about a giant Minnesota development gone mostly bad is just fascinatingly weird for so many reasons.


Oh, I'm sure Howie Kurtz will get right on this.

Entertain Us

I dream of the day when our political discourse isn't ruled by people who, sheltered from the real-world consequences of actual policy, see politics as nothing more than a show which is supposed to entertain them.



Sunday Bobbleheads

Document the atrocities.

ABC’s “This Week” — Former Gov. Mike Huckabee, R-Ark.; musician Steven Van Zandt, founder of the Rock and Roll Forever Foundation.
CBS’ “Face the Nation” — Sen. John McCain, R-Ariz.; David Axelrod, strategist for Barack Obama’s presidential campaign; Howard Wolfson, communications director for Hillary Rodham Clinton’s presidential campaign.
NBC’s “Meet the Press” — Sen. Jim Webb, D-Va.
CNN’s “Late Edition” — Rep. Ron Paul, R-Texas; Sens. Chris Dodd, D-Conn., Carl Levin, D-Mich., and Arlen Specter, R-Pa.; Lt. Gen. Raymond Odierno, commander of Multinational Corps in Iraq.
“Fox News Sunday” — Karl Rove, former adviser to President Bush; Rep. Chris Van Hollen, chairman of the Democratic Congressional Campaign Committee; Fred Smith, chairman and chief executive of FedEx Corp.

Not Gonna Work

While I previously said that the potential mortgage pain easing plan pushed by Paulson looked good at first glance, I'm increasingly convinced that the structure of Big Shitpile is such that there's really very little to be done. This bit in the NYT gets at why.

But specialists warned that it was too soon to describe the effort as a breakthrough, and some advocates for homeowners were skeptical that a voluntary plan by lenders would bring much relief.

“We need an increase in loan-modification activity that is so dramatically above what’s happening in the marketplace that it’s hard for a purely voluntary agreement to get the job done,” Eric Halperin, director of the Washington office of the Center for Responsible Lending, said.

Mr. Halperin, citing a report by Moody’s Investor Service, said mortgage servicing companies were modifying only about 1 percent of their troubled loans. One big reason, according to many specialists, is the difficulty in reaching agreement between the companies that service a mortgage and the investment funds that actually own the loan.

The people who actually own the loans aren't in the mortgage business anymore than stockholders in Apple are in the IPod business. Owners of these financial assets are in the business of trading pieces of paper with big numbers representing numerous actual mortgages on them. Those owners aren't necessarily the big financial institutions that we know like Citi; they might be small towns in Norway.

My guess is that the only thing which might really make any dent in this is actually modifying bankruptcy law to allow judges to change mortgage terms for primary residences the way that they already can for second homes and investment properties.

Still Not Gay

Idaho Statesman:

Audio clip disclaimer: Some of the audio interview excerpts contain explicit descriptions of sex not appropriate for children and listeners who find such content offensive. The Statesman provides the excerpts so Idahoans can hear these accounts and decide for themselves about accusations against Sen. Craig.

David Phillips. Mike Jones. Greg Ruth. Tom Russell.

Four gay men, willing to put their names in print and whose allegations can't be disproved, have come forward since news of U.S. Sen. Larry Craig's guilty plea. They say they had sex with Craig or that he made a sexual advance or that he paid them unusual attention.

They are telling their stories now because they are offended by Craig's denials, including his famous statement, "I am not gay, I never have been gay." Those words, spoken on live national TV on Aug. 28, are now memorialized on a just-released-for-Christmas Talking Senator Larry Craig Action Figure.

Good morning, peeps.

You know, I can't help the feeling that it is unwise of our government to convince the rest of the world that we regard their sovereignty and borders as notional.

Not Atrios