Analysis and Discussion with Nicolas Retsinas of Harvard University (Starting Bell)
Bloomberg, February 18, 2009
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof. —John Kenneth Galbraith
Retail Sales in Jan rose .4% headline m/o/m, .7% ex auto's, .6% ex auto's and gasoline and .7% at the core. The headline figure was less than expected while the rest were slightly better. But, with respect to non headline sales, because Dec figures were revised lower, taking the two months together were about in line with forecasts overall. Sales rose in electronics, building materials, food/beverages, clothing, sporting goods, dept stores and restaurant/bars and fell interestingly for online retailers, health/personal care, furniture and motor vehicle/parts. Bottom line, headline sales were below expectations due to the greater than expected fall m/o/m...
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February 19th, 2009 at 8:55 pm
There’s a fairly simple solution to the real estate crises: Declare 28-36 Debt-to-Income [DTI] Qualifications to underwrite mortgages in default which facilitate mark-to-market holdings for Financial Institutions. Those homeowners who cannot qualify for at least 75% of what they originally borrowed under 28-36 DTI, sign Deeds-in-lieu of Foreclosure for lease-purchase agreements with note holder(s) at fair market rent and purchase rights at market value (market value is based on others in market who can qualify under 28-36 DTI) today. Qualify the loans and the real estate market and values settle out while credit and trust are restored in mortgage backed securities producing financial market stabilization. The 25% write down is backed by the U.S. Government. This 25% is substantially less than the bail-outs to date. Banks and servicing agents are already in place to grasp the underwriting and non-performing loans become qualified so values are validated. This entire process could take 18-24 months but with immediate impact as this plan is less costly.
I may be the only one in the world who ever purchased his own mortgage at a deep discount and then sold the collateral for significant gain. I’ve learned one thing: He who controls the debt, controls the equity. The lease-purchase deals work to stabilize home prices and prevent vacant properties while the owner(s) (U.S. Government and/or Lender) does not have an expensive foreclosure process to conduct to have the property back in the market. We have to go back and underwrite what was not done the first time around. Simple. The accountability is back in the marketplace and credit markets restored as bottoms are established.
You make your money in real estate when you buy. If you don’t see it going in, you won’t see it going out.