Rolfe Winkler

HUD Secretary will quit

March 31, 2008

GWB’s embattled Secretary for Housing and Urban Development is expected to resign tomorrow according to the Journal.

HUD, usually a backwater federal agency, has been at the heart of the administration’s attempts to ease problems for homeowners. Although Treasury Secretary Henry Paulson has taken the lead on many initiatives, Mr. Jackson has been a partner on many, including programs such as Hope Now, an administration-backed industry plan to loosen the terms on hundreds of thousands of subprime mortgages.

HUD also runs the Federal Housing Administration, a big government division that insures mortgages for low-income homeowners and first-time home buyers. Many Democrats and Republicans have envisioned expanding the power of FHA to play a bigger role in stabilizing the mortgage market.

Thriftville vs. Squanderville

March 30, 2008

An oldie but a goodie (via Andrew Abraham). Warren Buffett explains in allegory why the trade deficit is bad news for the dollar over the long-run. [He wrote this piece in 2003, by the way. Since then, America’s current account balance has worsened significantly.] And it’s not just the dollar that will suffer, it will be America’s standard of living relative to the rest of the world……this is what people mean when they say the baby boom and Gen X are literally mortgaging their children’s future. For those with time, I recommend reading Buffett’s whole article.

Treasury Dept. proposes new power for Fed

March 29, 2008

This is good news and big news. I’m not a fan of regulation in general. This is a good first step

WASHINGTON — The Treasury Department will propose on Monday that Congress give the Federal Reserve broad authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.

More NAR B.S.

March 26, 2008

House prices continue to slide nationwide, according to the latest Case-Shiller data.

Are we in Recession?

March 25, 2008

“Does someone around here have an MBA” to explain all this stuff to us? W has one……

NAR Propaganda

March 23, 2008

The National Associate of Realtors wants you to know that “buying a house this year” would be a “good move, both for your family and [for] building your long-term wealth.” To spread this message, they’re running commercials on CBS during the NCAA Final Four Tournament. They’re pushing people to their new website: You can see the new commercials there….just follow the “watch TV commercials” link on the lower right side of the page.

Lowering Capital Requirements for Fan and Fred….

March 20, 2008

Can’t say I support this move. Seems a bit short-sighted to add MORE debt to Fannie’s and Freddie’s balance sheets. We’re simply encouraging them to throw more good money after bad in a quixotic attempt to keep house prices from falling any farther. And taxpayers remain on the hook if either or both of these companies–levered 50:1–end up in bankruptcy.

Interest Rates and the Dollar

March 18, 2008

Why do lower interest rates depress the value of the dollar? And why should you care? Good questions worthy of a textbook-length response. I will try my best…..

How ’bout some good news! Part 1

March 14, 2008

A dear friend e-mailed me yesterday and asked that I post some good news on my blog. It can be difficult these days as the credit markets implode and the realization sinks in that the worst is far from over. House prices have farther to fall, much farther. Banks will fail. The stock market will continue to crater as investors realize second half earnings will NOT rebound.

Where is all the oil money going?

March 14, 2008

Mish had a fascinating post of the same title. Hopefully he doesn’t mind me borrowing it. Take a look at these photos of the Sultan of Brunei’s plane. (Hat tip Clif). By the way, I can’t vouch for the factual accuracy of this info; I received it in an e-mail forward. But what the hell:

An Air Force Lt. General wrote: I toured this aircraft as it was being ‘remodeled’ in Texas. Yes, the sinks are solid gold and one of them is Lalique crystal. The Sultan bought the aircraft brand new for roughly $100 Million dollars. He had it flown to Texas from the Boeing factory and had the interior completely removed. Then, he had the folks at E-Systems install $120 Million worth of improvements inside and outside. I have gained entrance to nuclear weapons storage areas much easier than it was gaining entrance to see this airplane. While there it struck me. Maybe the rich really are different than the rest of us.

Capital Raising

March 13, 2008

Banks are strapped for cash. This much is obvious. Ways to shore up capital levels on a financial institution’s balance sheet fall into two categories that I can think of. Bring it in and don’t let it go. Ways to bring in new capital include infusions from sovereign wealth funds for example or making margin calls on stretched borrowers. Ways to keep existing capital on the balance sheet include not making new loans, cutting dividend payments to shareholders.

Fannie/Freddie may need to raise MUCH more capital

March 12, 2008

Below a story from Housing Wire, which itself quoted some figures in the Journal. Bottom line is that Fan and Fred don’t have the capital to back the mortgages they’ve guaranteed and will need to hit the markets for more at some point. I’ve written that Fan has at least $400 billion of subprime and Alt A exposure (and you don’t have to take my word for it). Given the losses in the subprime, Alt A, and even prime mortgage markets–what with the huge growth of negative equity in a world of falling house prices–it seems inevitable that Fannie will need more than the $40 billion of capital it has on hand.

Part of the reason both Fannie Mae and Freddie Mac’s stock has been punished recently is because of general concern over whether both GSEs can successfully weather the housing storm using current capital; the Wall Street Journal reported Wednesday that some market participants have been pricing in the expectation that both Fannie and Freddie will likely need to issue new stock. And alot of it.

Spitzer admits involvement in "Prositution Ring"

March 10, 2008

This is completely unrelated to the subjects of this blog, unless you consider his time as Wall Street’s great nemesis as Manhattan AG. But what a great story. Somebody obviously caught him with evidence so he’s trying to pre-empt it. He’ll say something contrite in the appearance he’s planning to make any minute now. I wonder if his wife will be standing with him the way James McGreevey’s wife did…….

ALBANY – Gov. Eliot Spitzer has informed his most senior administration officials that he had been involved in a prostitution ring, an administration official said this morning.


March 10, 2008

The A.P. notes that oil has reached a new high of $107 in intraday trading today: