“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Thursday, September 03, 2009

Happy talk will not fix housing. Housing will lead to deflation.

No one wanted to listen when the housing crisis began. The Republicans were just as bad and clueless as the Democrats, probably worse.

It should have been obvious that falling prices, the evaporation of credit and rising unemployment would create the perfect housing storm. The situation is actually getting worse, not better.

Some of the happy talkers have seized on any morsel of positive news to declare things are improving. Surely, at some time markets will heal, but at a needless price and a mass destruction of equity and capital.

I am not even going to review the suggestions made on this blog and many others that would have helped. It was a waste of time then and remains so now. Doctrine overruled pragmatism. Take your medicine.


Prime Jumbo Trouble: The Foreclosures Keep Coming
By Nick Timiraos

The volume of loans entering foreclosure and the rates of foreclosure starts showed no signs of slowing in July, even amid signs that early stage delinquencies may be slowing. Foreclosure starts increased by 7.1% in July, the second highest month on record, according to a monthly report by LPS Applied Analytics.

Among the report’s key conclusions: Foreclosure rates on prime jumbo loans, granted to borrowers with good credit and too large for backing from government agencies, surpassed the 2.98% average for all loan types in July, and continue to rise faster than any other loan type. Prime jumbo foreclosure rates are up a staggering 634% versus January 2008 levels, according to LPS Applied Analytics.

Meanwhile, a research report by FTN Financial notes that there are some signs that the rapid deterioration earlier this year of Alt-A loans, a level between prime and subprime that includes “liar’s loans” that didn’t require documentation of incomes, could stabilize in the coming months. But the same can’t be said about prime jumbo loans:

There is now very little financing available to support the high end of the housing market, and the performance trends in prime jumbo space are quite troubling. Therefore, we think the prime jumbo sector will surprise to the downside over the next 6-12 months, whereas the performance of the lower-loan balance Alt-A market will continue to flat-line for a few months before slowly improving starting in mid-2010.

A separate report by Hope Now, a mortgage industry coalition, found that foreclosure starts increased in July, to 284,000 from 251,000 in June, even as completed foreclosure sales decreased to 89,000, from 93,000.


  1. Wearing a pith helmet and brandishing a blunderbuss, Marshbaum burst into my office and ordered me to the floor. I looked at my faux friend and media foil, about to ask him what his latest scheme was.


    "American flags," said Marshbaum. "Most flags and flag pins — you know, the ones the semi-patriotic American politicians always wear - are made in China."

    Marshbaum thought a moment. "Maybe their Army won't need to invade us. They've already defeated us."

    'Rockets Red Glare' May be Chinese

  2. The quake seriously injured 503 people, and 105 others seriously, Rustam Pakaya, head of crisis center of the ministry said.

    Rescue operation for 37 people buried in the debris has been under way in Cianjur.

    Indonesian Health Ministry has also provided additional assistance to the operation, including 5 tons of baby food and other logistics, Pakaya said.

    Makeshift Tents

  3. A mere ripple in the pond.
    All's Well!

  4. Online home loans are almost always intended to be repaid over a long period, they are normally issued at low interest rates, unlike credit cards. So, if you carry large balances on your credit card, you must unravel in May struggle to meet all your monthly payments. Even if you make your minimum payment each month you will notice that your balances are falling away.