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Friday, July 18, 2008

Today's unofficial Housing Pain Barometer.

Friday, July 18, Anoka County Union, paper edition, Sections D and E, 46 pages of mortgage foreclosure legal notices.

46 pages!

I pulled a site specific Google search on Crabgrass; the first post on this "unofficial housing pain barometer" is here, May 26, 2008, where I noted some "baseline" foreclosure page-count data:

For a local and anecdotal comparison, an arguable baseline or trend - Anoka County Union past legal notices section -- Oct. 18, 2002, 8-1/2 pages; Feb. 27, 2004, 13 pages; March 26, 2004, 13 pages; Apr. 2, 2004, 11 pages; Nov. 5, 2004, eleven pages; Nov. 12, 2004, 9-1/2 pages; Feb. 11, 2005, 9-1/2pages; March 11, 2005, 10-1/2 pages; June 16, 2006, 17 pages; and earlier this month, May 9, 2008, 36 pages.

Last Friday, it was "only" 42 pages, see here.


This is bigger than pump price shock.

This is people losing their home, their equity, their investment hope for a springboard into a bigger-better home, with this as entry.

Pump price shock, we can work around. Lose the home, get into a negative equity position, it is not a downturn or a shock, it's a depression-recession, big time.

It's a GOP dollar depreciation too. It is a failure in market regulation when the Bush-Cheney team picked who would run the banking and investment watchdog agencies while the Fannie Mae and Freddy Mac ventures heated up before the fall, while mortgages were being securitized (along with CDOs, collateralized Debt Obligations being floated in the investment community) into "tranches" with the tail end being termed in that financing trade, appropriately enough, the "toxic waste" of the offering:

The issuer of the CDO, typically an investment bank, earns a commission at time of issue and earns management fees during the life of the CDO. An investment in a CDO is therefore an investment in the cash flows of the assets, and the promises and mathematical models of this intermediary, rather than a direct investment in the underlying collateral. This differentiates a CDO from a mortgage or a mortgage-backed security (MBS).

The loss of an investor's principal is applied in reverse order of seniority (i.e., highest credit risk tranches to lowest). The senior tranche is protected by the subordinated security structure; thus, it is the most highly rated tranche. The equity tranche (also known as the first-loss tranche or "toxic waste") is most vulnerable, and has to offer higher coupons to compensate for the higher risk.


Now it ALL is looking more and more like bail-out time toxic waste. You bet it goes up and you profit, you bet and it goes down, ask the GOP for a bail-out.

Nice world, that way. Nice friendly GOP, after all, it's only taxpayer money, not any office holder's. Finance the bailout as with the war, by issuing more debt or money.

I.e., by inflation, i.e., by debasing the currency.