This will make you feel warm and fuzzy...not!

Americans net worth shrinks $1.33 Trillion in the first quarter.

Now, I don't have any stocks..so I figured this news didn't really affect me. But..I saw this part and cringed:

Collectively, homeowners had 41.4 percent equity in their homes in the first quarter. That was down from 42.9 percent in the fourth quarter .The value of household real-estate holdings fell 2.4 percent.

But..never fear dear reader..because Bennie Bernanke says the recession will be over by the end of the year!

I guess he has a really great crystal-fucking-ball....

Or maybe it's because 10 of the banks have the ability to repay their TARP loans, to the tune of $68 Billion..because they jacked the living shit out of the credit card rates and anything else they could raise legally.

Our personal money trees are getting bare..

B of A buys Countrywide..

In a deal that saves the ass of the nation's largest mortgage lender, Bank of America has agreed to buy Countrywide in a 'stock-only' sale. Countrywide has been rumored to of been considering a Chapter 11 filing recently with the value of their stock at a garbage rate of $5 a share in December. "As of Sept. 30, Countrywide's savings bank held about $79.5 billion of loans as investments. Three-quarters of these loans were second-lien home-equity loans -- where Countrywide doesn't have first crack at the collateral in case of default"-according to the Wall Street Journal.

The WSJ has a nice explanation of what it all means here. The person who makes out like the bandit he is in this deal?

Why, the founder of Countrywide of course. Chief Executive Angelo Mozilo. Angelo might be taking home a nice little golden parachute of..wait for it...

$70 million bucks

Yep, that ain't a typo folks. Meanwhile the stockholders will get: 0.1822 shares of Bank of America for each share of Countrywide. Yes, that is a big fat fucking zero in front of that decimal point. Sure, they now will own stock in the largest bank in the US, but damn, that trade-off sure doesn't look real inviting does it? Bank of America gets a company that was valued at one time the amount of $24 Billion, and they got it for the bargain basement price of $4 Billion.

Oh, and Angelo will also get his countryclub dues paid through the year 2011 and get to use the corporate jet. Chuck Shumer had this to say about Angelo's sweet deal:

"Mr. Mozilo could display some good will by donating any severance pay he stands to receive to the nonprofit housing counselors trying to prevent foreclosures,"

Somehow, I doubt that will happen Chuckie..

Swiss Banker says our lending standards suck.

Amazing..the Europeans have finally figured out how fucked up our economy is and why. From the Telegraph.co.uk:

Switzerland's top banker has warned of massive losses from the unfolding credit crisis, describing the collapse in US lending standards as "unbelievable". Jean-Pierre Roth, president of the Swiss National Bank, said market turmoil was far from over as tremors from the sub-prime debacle continued to rock the world. "We're certainly not at the end of the story. There are question marks surrounding the development of the American economy," he said. "Something unbelievable happened. People who had neither income nor capital got credit with very attractive conditions. Now reality is striking back," he said.

Reality bites hard..

tags: American Economy, Housing Bubble, lending standards

Countrywide Mortgage has problems..to put it mildly.

A day after the news broke that Countrywide Mortgage was having a bit of "financial problems"..customers lined up by the hundreds to yank their money out of the banking end of the corporation.

Countrywide Financial tried to assuage the worry and fear that they were going under. They are the biggest mortgage company in the nation, but they also were loaning money to folks that could not afford the homes they were buying. From an LAT writeup:

The parent firm borrowed $11.5 billion Thursday by using up an existing line of credit from 40 banks, saying the money would help the lender meet its funding needs and continue to grow. But stock investors, apparently alarmed that the company felt compelled to use the credit line, sent Countrywide's already battered stock down an additional 11%.

That doesn't send a warm and fuzzy message to Wall St. does it? Nor does it send a good message to their customers..the LAST folks they need storming the doors to withdraw their hard-earned cash. Some branches actually ran out of cash and customers were forced to leave their names and get on a list to withdraw their funds.

But, if you listen to Wall St and those wonderful folks in high finance..the housing market problem is just a little blip on the screen..right pal..shades of the Great Depression to me. Countrywide was playing fast and loose with the loans it was making..like many of the Mortgage brokers..as witnessed by this tidbit from the LAT writeup:

Countrywide recently was funding about $40 billion a month in mortgages. Of those, about half qualified to be sold to Freddie Mac or Fannie Mae, and half were "nonconforming" loans the agencies don't buy, including sub-prime mortgages to higher-risk borrowers as well as jumbo loans, which account for 43% of all mortgages issued in Southern California.--Sub-prime is code for a shaky loan evidently.

tags: Countrywide Financial, mortgage industry, housing market








EDIT: If you want to know how bad off Countrywide is..here is a comment from a fellow blogger that I want everyone to see from my comments section: "Countrywide has my mortgage and it has nearly doubled in amount since last year which is why I'm trying to sell my house. No, it's not an ARM nor have I refinanced the loan or been late on any payments--in fact before it went up so drastically I was paying extra against the principle. They didn't pay my escrowed insurance, either, which I had to pay out-of-pocket to be reimbursed in June. Have I seen the reimbursement yet? Ha ha, good one! There's a website with hundreds of complaints about CW called "Countrywide Sucks" or something like that. A class action suit was mentioned on the site but I don't think there is one, yet."--Thats fucked up and I hope to God they all sue.

Ride the Real Estate Roller Coaster

You don't need sound really, but its a hairy ride, none the less. The creator of this video used the housing markets dips, spins and upshoots to create this video. Notice how high the final surge is from the ground by the scale of the objects on the ground..lots of room to fall..