Interesting form of combined media/blog outlet: Blogrunner.
Essentially, it lists top stories by topic (Politics, Business, Media, Technology, Economy, Law, Science, Health, Movies, Books, Religion, Entertainment, etc.)
Blogrunner then excerpts and links blog posts that comment on those stories.
Kinda like Google News, only annotated via blogs . . .
way better than Google news
i’ll give it a go for a few days
nothing better to do in the bear cave until bernanke speaks from the Hole
i can’t get out of my head some contrasting elements to this decline. one of them is that insiders are buying heavily through this. historically that doesn’t happen at tops. however, what if they are buying based on their current book of business that was starting to accelerate stongly in the second quarter. if they felt the possibility of a recession was small then through their eyes this correction is temporary and a great buying opportunity like 94 and 98.
we’ll see tomorrow. i have a feeling based on business confidence that the gdp number is going to come in hotter than forcast, throwing cold water immediately on the bulls call for an rate cut. a strong number would put bernanke further in the corner and create quite a moral hazard argument with economists.
this rally had bear market written all over it. i truly think this is one of the few times that joe and jane six pack knew what was coming down the pike before the street cared to acknowledge. it’s just so obvious that these guys egos are at a market top. don’t poll the public or individual investors or even the blogosphere when taking the pulse of this market, this bull has been completely led by the financial/brokerage sector. hardly any of those guys are bearish.
Here’s the letter from Bernanke to Schumer:
I’m going to once again engage in my favorite sport, objectivology… and try to discern what he actually wrote in the letter as opposed to some of the characterizations of it by media.
Why?… Well, I’m just different I suppose. Some people golf.
Let’s lift the whole letter from the reference and put it here (I may truncate the letter or alter the formatting slightly for emphasis, and where I have comments*** they’ll be identified with asterisks):
August 27, 2007
The Honorable Charles E. Schumer United States Senate Washington, D.C. 20510
Thank you for your recent letters of August 8 and 22, in which you express concern about the potential effects of volatility in financial markets and the tightening of credit conditions on homebuyers, consumers, and the economy as a whole.
I want to assure you that the Federal Reserve, in cooperation with other federal agencies, is closely monitoring developments in financial markets. As you recognized, the Federal Reserve has also taken steps to increase liquidity in the markets. In particular, our changes to our discount window program are designed to assure depositories of the availability of a backstop source of liquidity so that concerns about funding do not constrain them from extending credit and making markets. Also, the Federal Open Market Committee has stated that it is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets.
***There is absolutely nothing new in this letter to this point. Bernanke is simply reinforcing with Schumer one or more of the Fed’s formal mandates. Rex Nutting did his usually excellent job of being objective here: http://tinyurl.com/2m8bq9 and didn’t distort the wording of the letter at all, but merely reported the views of Tony Crescenzi of Miller Tabak who classified the content of the letter as “bullish.” Crescenzi’s opinion doesn’t change the words of the letter from Bernanke.
I share your concern about the potential impact of scheduled payment resets on homeowners with variable-rate subprime mortgages.
***Who wouldn’t that had any common sense?
Over the next several years, many such homeowners will face significantly higher monthly payments and, consequently, an increased risk of losing their homes to forced sale or foreclosure. The federal banking regulators have encouraged banks and thrifts to work actively with troubled borrowers to modify loans or to refinance as needed to avoid default or foreclosure and have jointly issued guidances to address underwriting and disclosure practices related to subprime mortgage lending.
***[A] – In other words: read all of Bernanke’s prior speeches and testimony and the policies and notices of the Federal Reserve. It’s all there Senator… nothing new here.
The twelve Federal Reserve Banks around the country are working closely with community and industry groups dedicated to reducing the risks of foreclosure and financial distress among homebuyers. The Board is also engaged in these issues; for example, Governor Randall Kroszner serves as the Federal Reserve’s representative on the board of directors of NeighborWorks America, which has a program to encourage
borrowers facing mortgage payment difficulties to seek help by making early contact with their lenders, servicers, or trusted counselors. And as I noted in my testimony in July, in order to strengthen consumer protections, the Federal Reserve Board is currently undertaking a comprehensive review of the rules regarding loans subject to the Home Owner Equity Protection Act as well as some rules pertaining to mortgage-related disclosures under the Truth in Lending Act.
***[B] – If you’re too busy for researching [A] on your own, then Bernanke’s sort of done it for you.
It might be worth considering at this juncture whether the private and public sectors, separately or in collaboration, could help the situation by developing a broader range of mortgage products which are appropriate for low-and moderate-income borrowers, including those seeking to refinance. Such products could be designed to avoid or mitigate the risk of payment shock and to be more transparent with respect to their terms. They might also contain features to improve affordability, such as variable maturities or shared-appreciation provisions for example.
***Okay, shared-appreciation is indeed something new and I’d be interested in seeing that topic fleshed out… but it’s not scary at this stage. It might just be that he’s suggesting a manner of legal and contractual sharing of what has generally, until this present time, been a pretty consistent increase in house price equity that typically is not available to lenders except with formal foreclosure and legal attachment procedures. A contractual sale by an otherwise responsible sub-prime borrower in which a portion of the equity were to be made available in sharing with the lender may assist in augmenting the sub-prime borrower’s affordability. It’s not that far in concept from a second mortgage lien that might be partially settled in shared liquidated equity, or it’s not even so distant from the concept of private mortgage insurance (PMI) were it to be sort of post-dated to the mortgage closing. What’s the big deal?… It’s just exploratory thinking about mortgages for a class of individuals that the FHA and VA already have mandated responsibilities with.
One public agency with considerable experience in providing home financing for low-and moderate-income borrowers is the Federal Housing Administration (FHA). The Congress might wish to consider FHA reforms that allow the agency more flexibility to design new products and to collaborate with the private sector in facilitating the refinancing of creditworthy subprime borrowers facing large resets.
***No kidding… It’s their job… It’s what they were made for.
As you note, the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac are currently assisting in subprime refinancings. However, the GSEs’ charters limit their ability to take on higher-risk mortgages and their programs are relevant only to a relatively small share of subprime borrowers. The GSEs should be encouraged to provide products for subprime borrowers to the extent permitted by their charters. The current caps on GSE portfolios–which were imposed for safety and soundness reasons-need not be lifted to allow them to accommodate new borrowers. Currently, the GSE portfolios include substantial holdings of GSE-guaranteed mortgage products, which are easily placed in the private secondary market even under current conditions. Thus, the GSEs could readily sell these securities to make space for new mortgages if they wished to do so. Policymakers may also want to encourage the GSEs to increase their mortgage securitization efforts, which are not constrained by their portfolio caps.
***Just like I’ve already commented about on another Big Pic topic, he’s not inclined to recommend that OFHEO lift the GSE’s caps. He’s clearly saying they don’t have to have the caps lifted to provide more mortgages… all they have to do is to sell their investment portfolios down (and thus slowly de-leverage their investment portfolio derivatives exposure, something else I’m sure he wants) and use that money for syndicating mortgages to sell, not own … more or less what he generally suggested in his March 2007 conference comments in which he pretty passionately (if that’s possible) criticized those investment portfolios as contributing nothing to the GSE’s original purpose and chartered organization for providing affordable housing.
We will continue to keep the Congress informed of developments in the subprime markets and in the credit markets more generally. As you know, FederalReserve governors and staff have made numerous appearances before the Congress and in other forums on subprime-related issues. Board staff members have continued to brief members of Congressional staffs on these matters. Board staff members are also assisting the Government Accountability Office in the report that they are preparing that will provide a comprehensive review of developments in the subprime mortgage market. [then Bernanke closed the letter]
***So, Herb… you can get your panties out of a wad. It’s not the wooly booger you think it is:
That is bloody brilliant. Thanks.
There can be no répondez s’il vous plaît without a formal invitation.
Go here, see the Greg Ip video:
…The message is that Bernanke’s monetary policy philosophy is closer to what Volcker’s was than many might have imagined, until now. Ultimately that provides stability to the economy, because market participants develop confidence in the integrity of the financial system, a sytem within which they must reasonably assess the marginal efficiency of capital expenditure. Volcker knew it… and he knew that macroeconomic health f-o-l-l-o-w-e-d the financial systems integrity; it didn’t l-e-a-d it.
The liquidity crisis we’ve experienced recently is the result of an attempt to force macroeconomic growth into a dysfunctional financial system.
Highly leveraged and derivatives-dependent CDOs, MBOs and their cohort… have damaged confidence in the financial system via the exercising of un-restrained free-market capitalism.
I just saw some very attractive eyes demonstrating an almost breathtaking and dedicated optimistic religiosity about the world.
It’s either educated and informed optimism, or it’s one of the better examples of willfulness for its own sake that I’ve seen in media for a long time.
I’ve pondered this matter of Bernanke at Jackson Hole for several days now… Ordinarily I wouldn’t have put much time and effort into anticipating this speech, but for a number of reasons it’s become a rite of passage for our Virgin Doctor:
Consequently he’s probably pulled out the stops for this one. I expect it to be a work of art, but more than that… it’s the chance he’s been waiting for… it’s all played into his hands. Eclectic knows… I’ve been inside his head. He’s a very direct man and I’ve paid a-t-t-e-n-t-i-o-n to what he’s said and written:
“Bernanke, you magnificent bastard… I’ve read your work!”:
That’s right… he’ll be there with a purpose, and he’ll be there with some ghosts too; Friedman’ll be there, standing with his protégé and expecting him to hold the line… Keynes’ll be there, too, watching with a mustachioed grin, like a Cheshire Cat fading in and out of the background as if to remind the Chairman that the intellectual pursuits of academia and the rocking chairs of back porches in his childhood South are long distant memories now. He might even mentally hear the immortal and evocative: “All we have to fe-uh i-s FE-uh it-self!”
I expect he’ll channel these influences from the world he’s studied and written about, much as Patton channeled the Carthaginians:
“I was there” he might think to himself. No, Doc… but you are now.
Back to the speech. What will he say?
Let’s get the big gorilla, rates, out of the way first. About rates, he’ll say… Zip!
I repeat, Zip! (about Fed Funds in Sep)
So, what’s going to be the theme of the speech? Well, I figure he needs a theme that’s bigger than just the topic he’s planned to address. What is it?… That’s the key – A theme that’s somehow different, but still on topic.
I thought and thought, and then… it crystallized from the mist. I think I know what the theme will be. It’ll focus on the new subject he’s opened:
Creative Mortgage Financing
Everything else about the speech won’t be any different than what he’s told us already and has been telling us for some time.
I covered his March 2007 housing conference comments here as an estimate of what he might say at Jackson Hole:
…and then I analyzed his recently released letter to Schumer here:
What is the essential difference between what I expected him to say Friday and what he’s recently said to Schumer?
Well, the answer was the new concept he raised concerning his exploration of creative financing suggestions as potential solutions to the subprime dilemma. That’s what got Herb all bent out of shape, when he spotted the idea of “shared-appreciation” and maybe “variable maturities.”
That has to be the theme, because everything else he might say, he’s already said, clearly and unequivocally; don’t lift the caps on the GSEs; Congress should exercise responsibility and control; the Fed will monitor and inform… and act if necessary; they opened the discount window to make necessary liquidity available; they’re reviewing and recommending control measures for the banking industry to supervise the mortgage industry; they’re involved in education and assistance for distressed mortgagees.
Why would he now need to expound on those again?… Schumer upstaged his Jackson Hole speech and has written all the mortgage vendors asking them for assistance for mortgagees. Having to respond to Schumer in writing has sent him back for an edit of the Jackson Hole speech… and the pressure that’s been applied to him by Doud and Schumer has resulted in him being forced to intellectualize answers to a problem that he doesn’t expect is the Fed’s problem to repair… at least not at this juncture.
So, my guess is that tomorrow’s speech is going to be a classroom experience directed at the mortgage industry. Greg Ip says he’s going to break from the Greenspan routine of aggressively presupposing a monetary crisis, so what’s left?… Nothing… Nothing to talk about except the newest thing he’s taken out of the box.
And if he doesn’t talk about that new thing, in this speech or soon, he’ll get hounded until he does. The media will be on him like the Hound Of The Baskervilles:
He’s opened the subject of creative financing in the Schumer letter and now it’s time to explain what he means. Were I the Chairman, I’d have used the resources of the Fed (possibly assign a task force) just for the purpose of designing innovative financing solutions to recommend. I’d write a new chapter in the history of the Fed and lay claim to my legacy.
I’m looking forward to that speech at 10 a.m. Eastern.
You think I’ll be close to the mark with my pure speculation?… We’ll see. I like the anticipation and the pressure.