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We’re Stuck With Properties, The Prices Are Very Low, Because The Market Is Being Flooded

A report from the Wall Street Journal. “A mortgage-lending company sponsored by private-equity giant TPG is delaying dividend payments and said it is in danger of running out of money if market turmoil continues, a fresh sign that nonbank lenders are getting squeezed. Less regulated than banks, these lenders issued billions of dollars in high-yield construction loans and other mortgages and also bought bonds backed by property debt. They funded these deals with the help of cheap bank debt facilities, which were in turn secured by their loan and bond holdings and corporate guarantees.”

“But now that the value of these holdings is plummeting from the coronavirus pandemic and as the U.S. economy grinds to a standstill, banks are demanding more collateral and some nonbank lenders are in danger of running out of money. TPG’s isn’t the only mortgage trust to come under pressure. Share prices for other mortgage REITs have also tumbled amid investor concerns over the property market. The shares of many of these companies are trading at just 30% to 40% of the net book value of their holdings, according to Steven DeLaney, an analyst at JMP Securities. ‘That’s insane,’ he said. ‘That’s recession pricing.'”

From Bloomberg.”The $16 trillion U.S. mortgage market — epicenter of the last global financial crisis — is suddenly experiencing its worst turmoil in more than a decade. Holders of mortgage-backed securities are fielding redemption requests from clients, margin calls from jittery counterparties and drops in their valuations, forcing the funds to solicit offers on billions in assets in emergency sales over the weekend. For Wall Street, the moment that crystallized the extent of problems in mortgage markets came Sunday, when some firms rushed to raise cash by requesting offers for their bonds backed by home loans.”

“Such solicitations are known as ‘bids wanted in competition,’ or BWIC. ‘I ran dealer desks for over 20 years,’ said Eric Rosen, who oversaw credit trading at JPMorgan Chase & Co., ticking off the collapse of Long-Term Capital Management, the bursting of the dot-com bubble some 20 years ago, and the 2008 global financial crisis. ‘And I never recall a BWIC on a weekend.'”

From Bisnow on New York. “Slate Property Group co-founder David Schwartz’s company owns some 3,000 rental apartments in New York City, including affordable housing and market-rate units. ‘There needs to be some sort of program in place for those who can’t pay their mortgage or rent, but not for those who just don’t want to pay, because that would start an absolute economic spiral,’ he said.”

The Charlotte Observer in North Carolina. “In a normal year, late March marks the middle of the busiest season for real estate agents. The spring buying season is when agents like Jonathan Osman of Tryon Realty Partners make a significant chunk of their income for the year. Instead, in the past several weeks because of the coronavirus pandemic, he’s had buyers put purchases on hold and saw sellers’ homes languish on the market. ‘It’s kind of like trying to sell a home during an actual hurricane,’ Osman said.”

From Mansion Global on Florida. “A penthouse apartment at One Thousand Museum, the futuristic new development designed by the late Zaha Hadid in Miami, has sold for $13.8 million. Friday’s sale of the five-bedroom apartment marks the first resale within the 61-story tower on Biscayne Boulevard. Around three weeks before the deal closed, the price of the pad was cut to $14.5 million, and the discount prompted a flurry of interest, according to listing agent Oren Alexander of Douglas Elliman.”

“‘We reduced the price to what we felt was truly market price,’ Mr. Alexander said. ‘Once we reduced it to market, we had a bidding war instantly. It shows you the issue in Miami is not demand but just unrealistic sellers and their brokers willing to take over-priced listings.'”

The Dallas Morning News in Texas. “Residential real estate sales firms haven’t wasted any time scaling back business because of the expected slowdowns from the coronavirus pandemic. One of the country’s fastest-growing home sales firms — Compass Real Estate — has already pared back its nationwide staff by more than 10%, according to multiple media reports. Compass, best known for its black yard signs, expanded into North Texas in 2018 and has quickly become a major player in this market.”

“But CEO Robert Reffkin is reporting that the company has experienced a 60% drop in home showings and expects a substantial decline in revenues. Other so-called disruptors in the real estate sales arena are also shifting gears. Zillow Group has announced a nationwide halt to its home purchase program. Home sales firm Redfin, which also operates in the Dallas-Fort Worth area, is cutting back as well. Other companies including Opendoor and Realogy‘s RealSure are also suspending cash offers for homes. Fitch Ratings in a new report is warning that some major home markets — including those in Texas — could see declines in home prices due to the pandemic and declines in the securities market and pending recession.”

The Los Angeles Times on Nevada. “It was just two weeks ago that Las Vegas native Carlos Rosales Jr. told his cousin that business at his new barbershop was doing so well that he was considering hiring a third apprentice. But that feeling evaporated last week when Rosales closed the barbershop following a statewide shutdown of non-essential businesses in an effort to contain the deadly coronavirus. ‘I don’t know how I’m going to pay my mortgage or car payments on my new truck,’ he said.”

From Vice Magazine on Canada. “Renting in Toronto is difficult at the best of times, so finding an apartment for less than $1,000 a month in a hip location is nothing short of a miracle. But look no further than this place we found on Craigslist last night. It’s going for only $975 a month and the landlord only wants first and last month. Wowzers! What a find! However, if you look a little closer there are a few hints that this property was not meant to be lived in by Toronto residents. The first would be the line that reads,’please note that you won’t have access to a kitchen and laundry in the house.’ Booo!”

“Ads like these in the time of ‘rona are a dime a dozen not only in Toronto, but across the globe, particularly in cities with a sizable tourism industry. And why is that? It’s because this was likely a short-term rental, such as an Airbnb, until now. ‘I have four units and they have always performed at 90 percent occupancy or higher until now,’ Andrea Orozco told the outlet. ‘I have four individual apartments within my bungalows. I might have to take in full-time tenants, but I really don’t want to.'”

“Orozco said that full-time tenants, the people who actually need housing, were just too much of a hassle and would rather sell than rent long term. Now, after aiding the destruction of Toronto’s rental market, short-term rental landlords are flooding both the rental market and selling off their condos or homes. It’s hard not to think of this as a long-needed reckoning, as short-term landlords have been raking it in for years, all the while as local renting residents have been forced to pay more and more for less.”

The Irish Independent. “There has been an increase in properties for rent due to the crash in tourist numbers, prompting hopes of a fall in rental costs. It is thought a number of landlords have withdrawn their rentals from short-term listing sites like Airbnb and are putting them on the market instead. The volume of rental stock in Dublin central is up 64pc alone, according to property website Daft.”

From Globes on Israel. “With no tourists around, owners of apartments that were being rented out on short-term leases are looking for long-term tenants. Yad2 analyst Nir Chen examined the supply of apartments available for rent in the main cities in the first two weeks of March 2019 and March 2020. He noticed a substantial rise in the number of apartments offered for rent in Tel Aviv. ‘We see an increase in the number of new notices reaching the Yad2 website. We believe that many Airbnb apartments that were meant for internal and external tourists have been converted to rental apartments. A steep rise in Tel Aviv is visible, and the reason is obvious – the coronavirus. The owners are putting the apartments back on the market, and the supply is increasing.'”

“The ‘Israel Airbnb’ and ‘You Are Not Alone – Apartments for Isolation all over Israel’ Facebook groups are offering many apartments designated for people in isolation. Omri Segev, CEO of the company who offers dozens of apartments all over Jerusalem, talks about a dramatic change in his company’s activity. ‘We’re trying to make lemonade out of this lemon. We’re been stuck with properties, and we’re trying to give good service to people who have to be in isolation. The prices are very low, because the market is being flooded.'”

“And the prices? Yulya Daiment, operations manager at the loginn company: ‘They’ve been cut in half.'”

From ABC News in Australia. “The spread of coronavirus across Australia could see unemployment reach about 10 per cent and house prices drop 20 per cent — and that may not even be the worst-case scenario, according to some economists. CoreLogic’s Tim Lawless said Australia’s housing market would start ‘losing steam’ by April, and the situation could be worse than expected because of high household debt. The areas worst hit by mortgage stress would be those exposed to tourism, and where there’s a higher portion of hospitality workers such as in some pockets of Western Sydney.”

“More properties could also be placed up for rent in coming months. Across the globe, Airbnb rentals are moving from short-term to long-term listings. If there was a sudden flood of rentals onto the housing market it could push down rental prices for certain types of properties.”

From Stuff New Zealand. “Property investors are pulling properties from Airbnb to offer as long-term rentals instead. A spokeswoman for Trade Me said usually 6 per cent of Trade Me rental listings were offered furnished. But since March 14, when the self-isolation rules were first announced, that number had increased to 11 per cent. ‘This puts the total number of fully furnished rental listings at double what they were at the time last year,’ she said.”

“Economist Benje Patterson said huge number of Airbnb units had been put back into the rental market in Queenstown in particular. ‘They are being advertised extensively across Facebook community groups at significantly discounted rents. Most come furnished and are often on six-month leases so that landlords have the option of putting the unit back on Airbnb if conditions have normalised again ahead of next summer,’ he said.”

“He said it was worrying because a big drop in yields for investors would push some to sell. ‘A flood of forced sales, at a time when confidence to purchase a home is low, could cause severe instability to pricing. There is likely to be moves by the government over the next week or two to implement mortgage relief in order to prevent such forced sales. The last thing the government wants is for a mass rush to the exit push other homeowners into negative equity and compromise financial stability in anyway.'”

This Post Has 191 Comments
    1. I knew investors were buying up a lot of the housing supply over the last decade. But I hadn’t fully thought through how many of those “investors” might be short term rental landlords. Realistically…who wants to stay in a hotel or Airbnb anytime soon, not having any idea who else has stayed there in the last month? Now I’m thinking this crash could be bigger and faster than I was even imagining…and you guys know I imagine a lot. These Airbnb guys are going to default left and right…and soon. The only question is, is the Fed going to buy them all up/keep them off the market somehow or are we going to finally see real deals? It’s going to take a lot more foam to levitate the market this time…

      1. “Now I’m thinking this crash could be bigger and faster than I was even imagining“

        Specuvestors are very nervous as shown on yesterday’s comment from Daz regarding the 200+ san diego listings. I would be willing to wager my TP roll stash, a good number were airbnb rentals or speculative purchases for airbnb income. IIRC, Last bubble SD cratered big time, mabye even the highest value declines in CA.

        1. Specuvestors are very nervous as shown on yesterday’s comment from Daz regarding the 200+ san diego listings.

          How does this compare to listings this same time last year? It is Spring afterall. I think a lot of people here underestimate how much it takes to get a property ready to list. If the switch flipped (i.e., “it’s time to sell, NOW!”), I would expect at least a two-month delay before a drastic increase in supply. And as I was told earlier today by my realtor, her sign company and photographers aren’t working right now even though lenders are taking applications and appraisals are being done by FaceTime.

          1. “ How does this compare to listings this same time last year? It is Spring afterall”

            I couldn’t tell you but with this chinese flu thing i can say 200+ listings in a 24 hour period seems like a rush to the exits. Listing a house does not take months either. In fact i had my last shack on the mls a couple days, took my own pictures and gave the realtor a flat rate to sell it although the actual sale (funds in my bank) took a couple months. If you want a picture perfect listing then yes you have to hire all the stagers, photographers, etc. ive seen plenty of listings that looked like someone took photos from a disposable camera after they had their kids tornado through the house.

            What do you thinks going on here…

            https://www.zillow.com/homedetails/3085-Monroe-St-Carlsbad-CA-92008/16618974_zpid/

          2. TBH that Carlsbad house is looks pretty nicely cleaned-up. Nice example of Minimalist Millenial Gray. I wonder how many dumpsters they needed.

          3. What do you thinks going on here…

            Listed for rent same day it sold on 6/25/2019. Probably empty since then. Pictures may even be from previous listing. Definitely a specuvestor heading for the exit.

            ive seen plenty of listings that looked like someone took photos from a disposable camera after they had their kids tornado through the house.

            As have I but they take longer to sell and take a hit with price. This one had exterior photos taken on a cloudy/wet day. The 25% haircut tells you how the interior was.

            https://www.zillow.com/homedetails/16135-Bennye-Lee-Dr-Poway-CA-92064/16747181_zpid/

          4. A listing, like a resume, is a first impression. I’m not saying it has to be pristine and perfect but if someone can’t take a modicum of time and effort to declutter and make something presentable I as a prospective buyer have no reason to think that the depreciating asset was cared for any better.

        2. yesterday’s comment from Daz regarding the 200+ san diego listings

          Daz
          March 24, 2020 at 7:39 pm
          Vegas 200 new listings in past two days. 36 new listings in last 36 hours. Still a problem with lack of inventory Diana?

          Daz
          March 24, 2020 at 7:48 pm
          San Diego 52 new listings past 24 hours.

          1. My bad, i used the numbers i saw while confirming the post. I use the trulia app and who knows if the 24 hour filter is accurate or not. Regardless, the amount being 50 or 200 or somewhere in between during this time seems high to me. With all this forbearance / mortgage payment delay it strikes me a bit odd that even specuvestors are listing now…

          2. forbearance / mortgage payment delay

            https://covid19.ca.gov/get-financial-help/#top

            90-day grace period for all mortgage payments

            If you are impacted by COVID-19, these financial institutions will offer mortgage-payment forbearances of up to 90 days, which allow you to reduce or delay your monthly mortgage payment. In addition, they will:

            Give you a streamlined process for requesting forbearance for COVID-19-related reasons, supported with available documentation (emphasis added);

            Confirm approval of and terms of forbearance program; and

            Provide you the opportunity to extend your forbearance agreement if you continue to experience hardship due to COVID-19.

    2. “…as AirBnB owners are suddenly forced to put their houses on the market.”

      Who knew that housing units were subject to margin calls?

  1. Coeur d’Alene, ID Housing Prices Crater 16% YOY As Sellers Flood Market And Slash Prices Double Digits

    http://www.zillow.com/coeur-dalene-id-83814/home-values/

    *Select price from dropdown menu on first chart

    As a noted economist said so eloquently, “liquidate whatever you’ve got to eliminate all debt and hold onto every dollar you’ve got…. You’re going to need every last one of them.”

  2. I’ve never heard of this guy, but he makes a point about existing foreclosures:

    ‘Hedge funds and banking institutions may already be feeling the pressure to attempt to contain the losses that are piling up (source: bloomberg).’

    ‘An extended decline in the global markets will continue to place pressure on institutional financial markets, banks, hedge funds, and other traditional lending and investment firms. Investors will start to pull investment capital away from risk (out of the markets and funds) and may expose some of these larger institutions’ excessive leverage and risk exposure in the process.’

    ‘This is almost exactly what happened with Bernie Madoff when his firm, Bernard L. Madoff Investment Securities, collapsed in December 2008. As long as there was no pressure on his firm from clients pulling out capital or asking too many questions, he was allowed to continue running his Ponzi scheme. Once investors started pulling capital out of the firm and questioning the transactions/reports, it became evident that it was all a house of cards and would come crashing down quickly.’

    ‘News is starting to hit the wires about large investment firms and Real Estate investment companies sounding the alarm. The fear is evident in the short content of a news article.’

    “Loan repayment demands are likely to escalate on a systemic level, triggering a domino effect of borrower defaults that will swiftly and severely impact the broad range of stakeholders in the entire real estate market, including property and homeowners, landlords, developers, hotel operators, and their respective tenants and employees,” he wrote.’

    ‘Just take look at the foreclosures in the major cities starting to spike in the maps below. This was before the virus closed down most businesses, and everyone losing their jobs. Give the fact that 70% or more of the world lives pay-check to pay-check, foreclosures and real estate values are likely to plummet lower to an extreme similar to how overpriced they are now.’

    https://finance.yahoo.com/news/concerned-real-estate-market-part-204958966.html

    I’ve been pointing out these foreclosure clusters for months.

  3. “The spring buying season is when agents like Jonathan Osman of Tryon Realty Partners make a significant chunk of their income for the year … It’s kind of like trying to sell a home during an actual hurricane”

    REALTOR, get a real job.

      1. I gots my used shack license off the interwebs so i gunna get me a coding cert there too

        1. No one cares about certs for coding. If you want to build cred, work on an open source project (for no pay, of course)

        1. Software engineering is the hard part.

          Yup. Joining a team and becoming a “part owner” of hundreds of thousands, if not millions of lines of code, and grokking it ASAP is the challenge; because you will have to make changes that don’t break other things via side effects.

          Automated regression test suites? We don’t need no stinking regression tests. Unit tests? Yeah, we stopped working on those when we began to fall behind schedule. We only had about 30% coverage to begin with, and half the unit tests are broken and no one has the time to fix them.

          1. half the unit tests are broken and no one has the time to fix them.

            Nonsense, you fix them and “get to green” by disabling them of course!

    1. Keep those inventory spike posts coming. There is nothing that could help the U.S. residential housing market more than investors dumping inventory to cover their margin calls!

  4. “There needs to be some sort of program in place for those who can’t pay their mortgage or rent, but not for those who just don’t want to pay, because that would start an absolute economic spiral,” he said.

    Now imagine that the bailouts prevent an absolute economic spiral, but millions of people become even worse off and get foreclosed and evicted (again). What are the political ramifications of that?

    All they have to do is have some kind of super-Chapter 11 that wipes out all those debts and stocks, followed by a re-boot. There would be a huge decrease in inequality, and everyone would start over on equal footing.

    The book The Rise and Decline of Nations asked how come the countries that lost WWII, Japan and Germany, were so much more economically dynamic than the countries that won? Because the special interests in those countries that started that war were wiped out by defeat, and no longer controlled the public and private sectors. Same in China after the communist revolution wiped out their special interests, though the boom was delayed by 20 years by Mao.

      1. The book was written in the 1970s, and complains about UK unions as “distributional coalitions” imposing a diminished economy on others.

        I think he would say the same things today, but with the finger pointed at the C-suiters and the financial sector instead of the unions.

        While there are many examples of Americans who got rich building valuable businesses one over the past 40 years, “distributional coalitions” were responsible for far more. In fact, I’d say that the union of C-suite executives and boards of directors is the most powerful in the country right now.

        1. Book.

          https://www.amazon.com/Rise-Decline-Nations-Stagflation-Rigidities/dp/0300030797

          “[T]his elegant, readable book. . . sets out to explain why economies succumb to the ‘British disease,’ the kind of stagnation and demoralization that is now sweeping Europe and North America. . . . A convincing book that could make a big difference in the way we think about modern economic problems.”―Peter Passell, The New York Times Book Review

          “Schumpeter and Keynes would have hailed the insights Olson gives into the sicknesses of the modern mixed economy.”―Paul A. Samuelson, Massachusetts Institute of Technology

          “One of the really important books in social science of the past half-century.”―Scott Gordon, The Canadian Journal of Economics

          “The thesis of this brilliant book is that the longer a society enjoys political stability, the more likely it is to develop powerful special-interest lobbies that in turn make it less efficient economically.”―Charles Peters, The Washington Monthly

          “Remarkable. The fundamental ideas are simple, yet they provide insight into a wide array of social and historical issues. . . The Rise and Decline of Nations promises to be a subject of productive interdisciplinary argument for years to come.”―Robert O. Keohane, Journal of Economic Literature

          “I urgently recommend it to all economists and to a great many non-economists.”―Gordon Tullock, Public Choice

          “Olson’s theory is illuminating and there is no doubt that The Rise and Decline of Nations will exert much influence on ideas and politics for many decades to come.”―Pierre Lemieux, Reason

          1. “When the government (taxpayers) begins guaranteeing the financier’s debt instruments the “beginning of the end” has been set in motion.” —rms

    1. Larry there is a very serious item to consider in the new mega bailout bill with regard to the Fed establishing a digital currency. That would take serious planning as in they have been planning this for months. Maybe they started with Event 201 or the meeting in Davos before that. But if it’s a reset it most likely will not be an accident.

    2. “There needs to be some sort of program in place for those who can’t pay their mortgage or rent, but not for those who just don’t want to pay, because that would start an absolute economic spiral,” he said.

      Last bubble burst, strategic defaults were exercised by small business owners and the well off with lawyer advice. They didn’t lose any sleep as it was just good business sense. That said, I’m sure the knuckle-draggers have heard about the eviction and mortgage moratoriums.

  5. Speaking of floods, how about that oil glut?

    Oil price may fall to $10 a barrel as world runs out of storage space
    Facilities thought to be 75% full with Saudi Arabia due to ramp up output as demand falters amid coronavirus shutdowns
    Jillian Ambrose
    Wed 25 Mar 2020 02.00 EDT
    Last modified on Wed 25 Mar 2020 10.10 EDT
    Crude oil storage tanks in Cushing, Oklahoma.
    Photograph: Nick Oxford/Reuters

    The world may soon run out of space to store its extra oil as Saudi Arabia prepares to increase its fossil fuel production even as global demand for energy continues to fall due to the Covid-19 pandemic.

    Oil storage levels across the world’s storage facilities have climbed to about three-quarters full on average since the January shutdown of major refineries in China’s industrial heartlands to stem the outbreak of the coronavirus.

    The oil industry is expected to keep filling oil storage with crude in the weeks and months ahead as the pandemic’s economic contagion spreads through the rest of the world, cutting demand for natural resources including oil.

    Canada may be days away from running out of storage for its domestic oil production, according to analysts at energy consultancy Rystad Energy, and the rest of the world may follow suit in a few months.

    The analysts expect that oil-rich regions in Western Canada will need to rein in production by about 400,000 barrels of oil a day by the end of the month.

    “Compounding the situation is the near-certainty of a steep reduction in crude-by-rail exports this year,” said Thomas Liles, an analyst at Rystad, “As well as deferral of spring maintenance at several key oil sands mining projects.”

    1. Oil price may fall to $10 a barrel

      If they would just let the equivalent happen in housing (you know it wants to) and let the debt get wiped out, we could do some amazing things as a society.

  6. “But now that the value of these holdings is plummeting from the coronavirus pandemic and as the U.S. economy grinds to a standstill, banks are demanding more collateral and some nonbank lenders are in danger of running out of money.”

    Value. But now that the VALUE of these holdings is plummeting from the coronavirus pandemic. What’s wrong with the word “price”?

    The PRICES of these holdings is plummeting from the coronavirus. Which means – what? Well it means that the values as described here is not something that is objective and thus can stand on its own but rather these values are subjective – they are subject to the opinions of other people – strangers even. The values are equal to the prices, and these prices result from the collective opinion of strangers.

    So the ignorant pukes who decided to borrow money of these holding due to their values are now screwed because these values were not true values after all but were the result of the opinions of strangers – many of whom were also ignorant pukes.

    And so here we are.

    1. It’s like 2008 all over again — but without the financial ammunition that we had back then…and a bigger bubble that needs to burst since they never let the old one correct properly.

      1. The Fed spokespeople are in full denial about what just transpired, at least judging from their public statements.

    2. “The values are equal to the prices, and these prices result from the collective opinion of strangers.”

      Sure, market value. And there’s nominal or par value.

    1. Server problems? Lol, is it that too many RE/investment professionals are suddenly rushing to the HBB archives to explain what the heck has been going on under their noses for years?

        1. It is due to increased demand of streaming services including porn. I’m not making this up. Due to the increase of people at home (working or not) there is an increase in demand for streaming services causing traffic to be impacted across the board.

          I don’t think it is the DNS infrastructure causing issues. I used to work for Verisign who still manages .com root infrastructure/registrar services across the globe. It’s the pipes and not the lookup. All lookup is cached further down the chain and much closer to client traffic.

          1. “It’s the pipes and not the lookup.”

            +1 Likely many firms are upgrading their single cluster Infrastructure as a Service to the distributed cluster to enhance load balancing and storage resiliency with so many working remotely. Lots of bandwidth used during the upgrade.

  7. ‘A flood of forced sales, at a time when confidence to purchase a home is low, could cause severe instability to pricing. There is likely to be moves by the government over the next week or two to implement mortgage relief in order to prevent such forced sales. The last thing the government wants is for a mass rush to the exit push other homeowners into negative equity and compromise financial stability in anyway’

    The affordable housing blah blah goes away pretty quickly.

    Shortage, shortage, GLUT!

    1. Really, was it only a couple of months ago that people were writing that Millennials can’t buy homes because prices have gone up so much relative to their incomes? Evidently that was a feature, not a bug.

      1. But…but…Diana Olick wrote that Millennials were going to save the housing market. You know, because they’re all about saving money and starting nuclear families with their secure living wage jobs.

        1. “…and starting nuclear families…”

          That’s a post-war relic according to Progressives who prefer some over-taxed working cuck supporting single women and their multi-ethnic children in public housing.

    2. ‘The last thing the government wants is for a mass rush to the exit push other homeowners into negative equity and compromise financial stability in anyway’

      They could protect the owner-occupants while flushing the foreign investors and financiers who are driving down inventory through highly leveraged HODLing — a sort of residential housing market Passover.

      That would open the door for Millenial households to have a shot at future home ownership without predetermined financial hardship.

    1. This mortgage mess was evident in the wild swings in US treasuries recently. It was obvious people didn’t know what the paper or the RE was worth, some of that is discussed in the Bloomberg link. It’s been over a year since we learned 40% of the non-bank shack lenders were not making a profit. The spread between mortgages and treasuries is what broke the camels back, IMO.

      1. “It’s been over a year since we learned 40% of the non-bank shack lenders were not making a profit”

        This is what is so interesting. 1) No profit, making and selling gov’t guaranteed loans at the peak of the biggest housing bubble in history? How does that work? 2) Does “no profit” mean “breaking even” or does it mean “loss”? And what are they losing? The real bank’s money. Since 2018.

      1. Lots of people on YouTube are telling me to “plant a garden” for my fresh fruits and veggies. News Flash: I’ve tried it. The capital costs are high and the harvest is pathetic. At least for now, I’d rather spend the money on canned meat and supplements. Much more nutrient dense.

  8. “But now that the value of these holdings is plummeting from the coronavirus pandemic and as the U.S. economy grinds to a standstill, banks are demanding more collateral and some nonbank lenders are in danger of running out of money. TPG’s isn’t the only mortgage trust to come under pressure. Share prices for other mortgage REITs have also tumbled amid investor concerns over the property market. The shares of many of these companies are trading at just 30% to 40% of the net book value of their holdings, according to Steven DeLaney, an analyst at JMP Securities. ‘That’s insane,’ he said. ‘That’s recession pricing.‘”

    Smart kid. Nothing get pass him. Must be the brightest bulb in the Frat house?

    1. ‘That’s insane,’ he said. ‘That’s recession pricing.‘

      The stupidity is fatiguing me quickly. I don’t get as much energy from schadenfreude as I did last time.

  9. ‘I don’t know how I’m going to pay my mortgage or car payments on my new truck,’

    I can’t take anymore of these stories. When did it become normal for people to use debt to buy the most rapidly depreciating asset the average person can own. You are paying interest to own something that has a predetermined value of 0$ In 10-20 years.

    1. “When did it become normal for people to use debt to buy the most rapidly depreciating asset the average person can own.”

      Right about when they came up with a 15 and 30 year mortgage.

      Charlotte, NC Housing Prices Crater 14% YOY On Surging Crime And Mortgage Defaults

      https://www.zillow.com/charlotte-nc-28202/home-values/

      A noted economist stated, “Get what you can get for your house today because it’s going to be less tomorrow for decades to come.”

        1. Monthly payment plans go as far back as the Model T.

          I remember my dad put about 50% down on his ’64 Impala SS. The loan was 2 years IIRC.

          1. The price of the car wasn’t even 20% of his annual take home pay.

            The mortgage was about $100 a month and $30 would fill up the back of my mother’s station wagon with groceries. My mom used to shop at the long defunct Gemco store in Fountain Valley, CA. They would take your bagged groceries to a pickup area, so you could shop at the non grocery portion of the store before picking up your groceries later. So she would do the shopping and then drag me off to get me some sneakers, shirts, etc. She had a ’59 Bel Air wagon, which they bought before I was born.

          2. ’64 Impala SS

            Nice. It was always weird to me how the lowrider guys completely bought up the entire supply of those. My dad took a 427 out of the much uglier 69 model and used it for his fun 4wd truck motor during my teen years. That meant I also had a fun truck growing up too :-).

          3. @In Colorado:

            “…$30 would fill up the back of my mother’s station wagon with groceries.”

            Whaaaat? Sorry, I am a Millennial. $30 never bought much.

          4. $30 never bought much

            Around 1970 our “household” budget was $100/mo. That was all household shopping, except gasoline, not just food items. The house we rented was also $100.

    2. When did it become normal

      Bout the same time it became normal to buy a car that costs 1 x yearly income and a house that costs 5 to 10 x that.

      1. Bout the same time it became normal to buy a car that costs 1 x yearly income

        Even the idea of spending 20% of my annual income on a car gives me the heebie jeebiesl

        1. Me too. I do spend some because cars are so fun to me, though. Spent 26k on the BMW back in about 2011 and spent another 10k this year making it fast(er). Keeps me entertained enough to justify that much expense, but it’s hard for me to justify much more. I’ll probably enjoy this another 10 years if nobody runs into me hard and I don’t give it to someone that needs it more than I do.

        2. Just bought a lightly used Camry for $16k, aim to keep it 10 years. 2017 model, last year run before the 8 speed transmission and direct injected engine and more stuff to break. I make well into the six figures. Still didn’t like buying it.

          1. I’ve been driving a 2017 Camry for a while now. It’s a good car – handles well, plenty of pep when you put your foot down. Mileage averages about 27-28 mpg, on some trips I get in the low to mid 30’s mpg.

            Now that it’s 3 years old, it’s practically invisible. Definitely does not turn any heads, and that’s fine by me. It will need a new set of tires soon, but that’s expected.

          2. Ooh ooh, can I join the 2017 Camry club? Bought mine new, paid it off last summer. Definitely a nice gray man vehicle about town. I get 25 mpg in pure slow city driving, upwards of 40+ on the highways.

          3. gray man

            Ah, unassuming. The phrases I learn from you and rms. My last decade has apparently been more sheltered than I thought.

    3. Well I guess I am an outlier then. My parents never financed any of their vehicles and I never bought a car that I couldn’t pay for with throw away money out of my pocket. But I never bought a new car because I was always able to find a decent used vehicle at a steep discount. I just don’t remember my friend’s parents or my aunts or uncles financing cars either when I was growing up. Maybe i don’t have enough data but it seems much more common now to finance a vehicle.

  10. “A penthouse apartment at One Thousand Museum, the futuristic new development designed by the late Zaha Hadid in Miami, has sold for $13.8 million. Friday’s sale of the five-bedroom apartment marks the first resale within the 61-story tower on Biscayne Boulevard. Around three weeks before the deal closed, the price of the pad was cut to $14.5 million, and the discount prompted a flurry of interest, according to listing agent Oren Alexander of Douglas Elliman.”

    “‘We reduced the price to what we felt was truly market price,’ Mr. Alexander said. ‘Once we reduced it to market, we had a bidding war instantly. It shows you the issue in Miami is not demand but just unrealistic sellers and their brokers willing to take over-priced listings.’”

    So cut the price to 14.5 M and bidding wars get price to 13.8 M? I called BS here. Was everyone bidding the price lower?

    Also, this was probably closed some time ago. BEFORE the virus hit. What is the true market value now?

  11. Thanks for today’s post, really digs deeper into the mortgage bond market turmoil.

    “[non-banks] bought bonds backed by property debt.”

    I didn’t realize shadow banks issued AND bought bonds. Bought from whom? Other shadow banks?

    “But as the bonds fell in value, TPG RE Finance had to post more cash as collateral for these loans”

    What cash? If the shadow banks had their own cash, they wouldn’t need to borrow from the real banks.

    “While TPG RE Finance Trust is under immediate pressure from its bond investments, the company’s direct real-estate lending could become a problem in the medium term. The company holds $5.1 billion in real-estate loans, also partly financed with debt facilities from banks.”

    Holds? Ok, so this non-bank wasn’t selling all the loans on. In fact it sounds like they were keeping at least some the loans they originated AND buying others. Isn’t this getting high on their own supply?

    I’m no expert, but all this and yesterday’s post/comments seems to indicate the real banks aren’t as insulated from the non-bank fallout as the whole non-bank plan was supposed to make them.

    1. “The company holds $5.1 billion in real-estate loans, also partly financed with debt facilities from banks.”

      That’s what people who ranted about Glass-Steagal in 2008 and 2009 missed. It wasn’t the integrated banks that caused the problem, because they were regulated. It was their lending to the non-banks that were not. Glass-Steagal wouldn’t have helped that.

      There was some talk of limiting the amount that a given bank could lend to a give non-bank back then. I don’t know what happened. But if all the non-banks go down, it doesn’t matter. Banks are only as solvent as their customers.

      1. “But if all the non-banks go down, it doesn’t matter. Banks are only as solvent as their customers”

        Weren’t the non-banks were designed to pump up this latest bubble without risk to the real banks, and implode if necessary? With the non-banks acting as frontman for the real banks, so if there’s a crisis, the bank just pulls the non-bank’s credit line, the non-bank folds, and the people stuck with the real losses are the investors who bought the non-bank-originated loans.

        But this collateral business seems to be getting the real banks into more trouble than if they just offered the credit line with no collateral. On the residential side, servicing contracts; on the commercial side, non-banks keeping their own and buying the crap mortgage bonds of others (maybe because no one else would? Were these shadow banks each others’ buyers of last resort? I wonder….)

        1. the people stuck with the real losses are the investors who bought the non-bank-originated loans.

          Uh oh. I wonder if any of those investors are People Who Matter?

          1. Maybe, but I bet a lot are normal people’s pension funds, moneymarket funds, etc.

    2. The only thing I ever thought might save us from the fake markets and pricing was to become a productive Nation again.

      High employment with bringing back the outsourced jobs and manufacturing would of propped the USA up. Globalism only made the one percent richer.

      The creation of bubbles by faulty lending and bogus investment is horrible.

      Price sitting monopolies wanted to much of the pie, while easy credit was used for these industries to take the money and run.

      Now it’s bail out time again but I have no faith in Washington DC to make the right moves. The public Is at the mercy of those clowns. to pick the winners and losers.

      We will see what happens , but I’m in favor of just short term relief, mostly going to laid off people. Also ,the medical Cartel needs some help because they were not prepared for the C-19 emergency, and maybe they should be back charged for costs. After all, the medical Cartel and big Pharma is going to charge a lot of money for servicing anyone during this emergency, and it won’t be free.

      Maybe giving some loans to business make sense, but it needs to be means tested based on net assets.

      We bailed out the crooks the last time in 2009, and nothing that should of been corrected was.

      1. I agree with much of that, except the problem with globalism was debt. If the U.S. had to pay for imports with exports, some good things (China’s development, Americans getting I-phones) would have happened more slowly, but would have been on firmer ground. Now both countries are going to be earnings.

        If workers had to pay for stuff with wages, there could not have been that massive increase in inequality. Look at the charts in this post — debt, inequality, and the trade gap all went together.

        https://larrylittlefield.wordpress.com/2018/09/06/rising-u-s-debt-is-the-real-cause-of-the-u-s-trade-deficit-and-inequality/

        This should have self-corrected decades ago. Our trade gap should have caused the dollar to fall, making imports more expensive. As to why it didn’t — that an interesting discussion. The other country with a massive perpetual trade gap — the U.K. is also the other country with a dominant financial sector.

        1. Now both countries are going to be hurting, I meant to write.

          But before we talk about not buying cheaper stuff from China, how about that cheap oil?

  12. Less regulated than banks, these lenders issued billions of dollars in high-yield construction loans and other mortgages and also bought bonds backed by property debt.

    What could possibly go wrong? Policymakers, regulators, and enforcers who let this racket go on for so many years should be put on chain gangs and have all of their personal wealth and property confiscated for dereliction of duty.

  13. The $16 trillion U.S. mortgage market — epicenter of the last global financial crisis — is suddenly experiencing its worst turmoil in more than a decade. Holders of mortgage-backed securities are fielding redemption requests from clients, margin calls from jittery counterparties and drops in their valuations, forcing the funds to solicit offers on billions in assets in emergency sales over the weekend.

    Getting a weird sense of deja vous about all this. Like we’ve been here before. Cue Lehman moment in 3-2-1….

  14. ‘There needs to be some sort of program in place for those who can’t pay their mortgage or rent, but not for those who just don’t want to pay, because that would start an absolute economic spiral,’ he said.”

    I have just the thing. It’s called “Evict their deadbeat asses, then let greedy landlords go bankrupt and get their apartments foreclosed on.” Ban the Fed’s vulture fund cohorts from owning them – require all ownership to be local. Then affordable housing can be a thing again.

  15. Compass, best known for its black yard signs, expanded into North Texas in 2018 and has quickly become a major player in this market.”

    Pretty soon Compass will be known for the black arm bands worn by realtors who aren’t closing.

  16. ‘I have four individual apartments within my bungalows. I might have to take in full-time tenants, but I really don’t want to.’”

    That’s too bad, Andrea. You better get used to running a boarding house.

  17. It’s hard not to think of this as a long-needed reckoning, as short-term landlords have been raking it in for years, all the while as local renting residents have been forced to pay more and more for less.”

    There’s going to be lots more reckonings as the Fed’s Everything Bubble bursts and trillions in fake wealth and valuations are wiped away.

  18. “And the prices? Yulya Daiment, operations manager at the loginn company: ‘They’ve been cut in half.’”

    Gosh, I sure hope the lenders are nice enough to cut the owners’ mortgages in half, too. Cuz it would be tragic if their mortgage payments stayed the same but the value of their real estate plummeted.

  19. CoreLogic’s Tim Lawless said Australia’s housing market would start ‘losing steam’ by April, and the situation could be worse than expected because of high household debt.

    Household debt has tripled since 2008, courtesy of the Keynesian fraudsters at the central banks and their easy money policies. Now the chickens are coming home to roost. Who knew such insane levels of debt could pose a systemic risk to the financial system?

  20. He said it was worrying because a big drop in yields for investors would push some to sell. ‘A flood of forced sales, at a time when confidence to purchase a home is low, could cause severe instability to pricing.

    And that’s worrying how? Let these greedy speculators get their heads handed to them, along with all the FBs who pushed housing to such unaffordable levels that priced out the prudent and fiscally responsible.

  21. Dumb question of the day:

    Is the Congressional stimulus package somehow targeted at Wall Street (what surging share prices suggest)?

    1. If most people become even worse off and stock prices don’t plunge too…those who are as dumb as a second coat of paint will get it and be very angry.

      Like beyond Trump and Bernie angry.

      Trump wants to postpone the hosing until after November. But the question is this — in the end, who is going to pay for a “stimulus” equal to twice the federal budget and three times federal revenues?

      1. Bernie Sanders is rightfully calling the stimulus package “corporate welfare.” This is crony capitalism at its most blatant and nauseating. Very little of the “stimulus” will make its way to Main Street, much less into the pockets of the beleaguered proles.

        1. The $1,200 dollars or whatever is shut up money for the masses. That way the politicians can say “look what we gave you.” My feeling is if it’s $1,200 per person, then it should be $1,200 per bailed out corporation. Fair’s fair, right?

    2. Stocks
      Published 1 hour ago
      Dow soars 1,300 points after $2T coronavirus aid deal
      The package gives aid to American workers, families and small businesses
      By Jonathan Garber FOXBusiness
      The $2 trillion economic stimulus package to support Americans during the COVID-19 pandemic will give billions of dollars to small businesses and larger industries. FOX Business’ Hillary Vaughn with more.video
      Sen. Schumer: $2T stimulus package ‘unemployment on steroids’

      The $2 trillion economic stimulus package to support Americans during the COVID-19 pandemic will give billions of dollars to small businesses and larger industries. FOX Business’ Hillary Vaughn with more.

      U.S. equity markets gained Wednesday after lawmakers struck a deal on a $2 trillion relief measure to provide aid to those most severely impacted by the COVID-19 pandemic.

      The historic package will “rush new resources onto the front lines of our nation’s health care fight, Senate Majority Leader Mitch McConnell, R-Ky., said Wednesday. “And it will inject trillions of dollars of cash into the economy as fast as possible to help Americans workers, families, small businesses and industries make it through this disruption and emerge on the other side ready to soar.”

      The Dow Jones Industrial Average surged as many as 1,300 points, or 6.3 percent while the S&P 500 and the tech-heavy Nasdaq Composite were up 5 percent and 3.4 percent, respectively. All three of the major averages had sporadically dipped into the red earlier.

      1. If they really wanted to inject cash to poor people put $1000 on everyone’s EBT card $500 for food and $500 cash….it will be gone in a few days.

        1. Local sheriff’s department here in rural California is bracing for a spike in overdoses right after the checks come.

      2. The agreement was only between the White House and the Senate. They’re trying to involve Nancy Pelosi to get it through the House without any fanfare, but of course House members want in sausage-making. The question is whether Nancy can keep her caucus in check. She knows that if Dems in the house demand their pork, it’s going to make the news that it’s Dems that are holding up the show, and not Trump.

  22. In Spain and Italy, residents on lockdown have been gathering on balconies for impromptu sing-alongs to raise their spirits. In a show of solidarity, millions of Northern Europeans have also come out onto their own balconies to shout, “Realtors are liars!”

    Ahem….

  23. I’m so sorry Ben. My usual schedule has been upended by starting to work at home this week and I am late. Should have posted this yesterday morning.

    Happy Belated Birthday!!

    I hope you had a great day, and the coming year is also great and gives you good health!

      1. I would not take that personally Ben! There is so much going on, that most of us are forgetting everything but getting through each day. (Of course, that may also have to do with the fact that I am getting to THAT age. 🙂 )

        PS I am now (finally!!!!) in Washington state, if you ever decide to do a meetup this way. Also, I am sure PB, Joanna, and a few others would love to do another San Diego one if you ever get down there. I would just need some time to plan.

          1. Doing fine other than MIL in rest home…They are locked down…Wife & SIL go feed her every day but have not seen her now for 2 weeks…Real bummer for the girls…They go through each day wondering if they will ever talk to her again…

          2. That’s so scary Dave – sorry to hear it. I hope she comes through just fine. Sending my best energies her way.

  24. Boomer Remover is not working very well.

    L.A. County coronavirus death toll rises to 11, including Lancaster teen whose case is still being investigated
    Local News
    by: Kristina Bravo, Wendy Burch, with reporting by Marissa Wenzke
    Posted: Mar 24, 2020 / 12:14 PM PDT / Updated: Mar 24, 2020 / 06:13 PM PDT

    Los Angeles County officials on Tuesday reported more losses in the battle against COVID-19, disclosing for the first time since the outbreak began the death of a minor possibly due to the coronavirus.

    The L.A. County Department of Public Health only described the minor as a Lancaster resident under 18 years old.

    Later in the day, Gov. Gavin Newsom said the patient was a “teenager,” not a child, and calling the death a “tragic loss.” The teen did not have pre-existing conditions, L.A. Mayor Eric Garcetti said he learned from the county.

    “It’s a sober reminder that this can take anyone, somebody without pre-existing conditions, somebody who is not a senior,” Garcetti said at an early evening news conference. “Anybody can die from this disease.”

      1. Saw some very interesting articles like the below last night where various NY pols were telling people the beer virus was no biggie as late as early March and if you didn’t want to rub noses with Chinese people you were racis!

        https://www.huffpost.com/entry/coronavirus-chinatown-businesses-decline_n_5e4599dbc5b603b067c89fb0

        I guess NYers can be happy their enlightened leaders didn’t ask them to hug an Asian like that one clown in Italy. BTW, has he died?

    1. I’m still going to go with the innoculation theory, where “innoculation” is your initial dose of virus:

      Picking up a few virus particles from contaminated surface –> small innoculation –> –> mild case.
      Getting sneezed on by asymptomatic carrier –> large innoculation –> serious case.

      This is why EVERYONE should be wearing some kind of mask, even if it’s just a handkerchief. It won’t stop 100% of the droplets, but it will reduce that initial dose.

  25. Long time no talk. Watching the stock market, I follow the Exchange Traded Fund “SPY” (S&P500.) On Monday February 24 SPY gapped down big. I have accounts with two larger brokerages, and the daily open-high-low-close charts for both do not show the gap. I was able to find the hourly chart for February 21 to February 25 and it shows that at no time on February 24 did the price trade higher than the lowest price on February 21.

    Am I missing something? I’ve never seen this before.

  26. People are worried about paying rent and mortgage. Can’t banks agree to defer a month or two of mortgage, and landlords defer rents? So you used to have a 30 year mortgage, and now you have a 30 year and two month mortgage. Who loses?

    1. Not everyone has a mortgage and rent may be the only some of income for some landlords. My husband, a property manager, has owners in this very predicament.

      1. Then you’ve got a-hole tenants trying to exploit the situation (e.g., habitually late with rent and still employed with six-figure incomes). This is far from black and white.

  27. The situation on the ground is getting difficult.

    ‘That’s when all hell broke loose’: Coronavirus patients start to overwhelm US hospitals
    By Michael Nedelman, CNN
    Updated 4:18 PM ET, Wed March 25, 2020

    (CNN) “We ended up getting our first positive patients — and that’s when all hell broke loose,” said one New York City doctor.

    The doctor, who spoke to CNN on condition of anonymity out of concern for his job, described a hospital that was woefully unprepared for an influx of Covid-19 patients that started roughly two weeks ago — which has already stretched the hospital’s resources thin and led to severely ill patients outnumbering ventilators.
    “We don’t have the machines, we don’t have the beds,” the doctor said.

    “To think that we’re in New York City and this is happening,” he added. “It’s like a third-world country type of scenario. It’s mind-blowing.”

    1. “To think that in New York City that this is happening.”

      What an asinine assertion. Sure, NYC is The Greatest City In the World In The History Of ForEVAH. Wealthy city, gourmet restaurants, music, nightlife, glitz, glamour, etc.

      But it’s also a city where millions of people go out to eat almost every single day, stuff themselves into the subway every single day, and put their hands all over taxi seats and elevator buttons every single day. You could be barefoot in an old T-shirt in Niger, or wearing Ferragamos with Armani in New York — Beer Bug doesn’t care. All it sees is another host 6 inches away. To the virus, NYC IS a third-world country — in fact it’s better, because it’s not so hot or humid.

    2. Coronavirus
      ‘This Virus Unfortunately Is Perfect:’ NYC ER Doc Who Survived Ebola Shares Dire Warning
      Craig Spencer, a recent Twitter sensation, warned ventilators will soon run out in NYC hospitals
      Published March 25, 2020 • Updated on March 25, 2020 at 11:09 am
      Cuomo Slams Feds for COVID-19 Ventilator Shortage: ‘You Pick Who Dies’
      NBC Universal, Inc.
      New York Governor Andrew Cuomo slammed the federal government Tuesday for not sending enough ventilators for New York’s need.

      The New York emergency room doctor who survived Ebola five years ago and is now on the frontlines of the city’s battle against COVID-19 has a stark warning: he’s more scared of this new virus than the one that almost killed him.

      Craig Spencer, an ER doctor at Columbia University Medical Center, got Ebola in West Africa in 2014 trying to fight the outbreak there. He gained a new notoriety Monday with a series of tweets about a night in the emergency room, where 90 percent of his patients had coronavirus. He was at it again Tuesday, with even more dire warnings about the situation in his hospital.

      Spencer told the TODAY Show Wednesday morning that things are not getting any better, even as the White House pushes to reopen the economy in just a couple of weeks.

      “The reason that I’ve said in many ways this coronavirus pandemic is worse than working in West Africa during Ebola is because I never once worried about my personal protective equpment in West Africa, and this virus unfortunately is perfect in the sense that it spreads really really well, it hits all age groups and it’s just … it’s really scary the potential this virus has,” Spencer said.

      New York state now has roughly 50% of all U.S. coronavirus cases, and New York City in particular represents about 30% of all nationwide cases. Gov. Andrew Cuomo said Tuesday that infections are doubling every three days and that they could peak in three weeks — at a level that far exceeds the state’s capacity of hospital beds, ICU beds or ventilators.

      “We know that we’re really at the beginning of this. Case numbers are increasing on a daily basis and soon our hospitals are going to be overwhelmed,” Spencer warned. “At the rate that we’re putting people on ventilators – at some hospitals 1 to 2 per hour – the simple math shows it’s only a matter of time until we run out.”

    3. Coronavirus
      NYC Death Toll Spikes 110% in 36 Hours; Cuomo Blasts ‘Terrible’ Fed Plan as Cases Soar to 32K
      “Our single greatest challenge is ventilators,” Gov. Andrew Cuomo says. “We have 11,000. We need 30,000”
      Published March 25, 2020 • Updated 28 mins ago
      What to Know
      – New York, New Jersey and Connecticut are on “pause,” shutting down all non-essential businesses and enacting new density control measures; NJ says day care centers can only stay open if they care solely for essential workers’ children
      – As of Wednesday, more than 38,000 people in the three states had tested positive for COVID-19; at least 447 have died; NYC has more than 20,000 cases alone and three-quarters of the 366 deaths statewide
      – The doctor coordinating response for the White House Coronavirus Task Force says 50% of all new U.S. cases and nearly 1/3 of U.S. deaths are coming from the NYC metro area right now

      Gov. Andrew Cuomo blasted the feds’ $2 trillion proposed economic relief package Wednesday, saying it would be “terrible” for New York, which faces an accelerating rate of infection that doubles case count every few days and an economic shortfall worsened by each day of response to the crisis.

      “We have 15 times the problem of the next state. Every state will have a different apex with this virus. New York is first,” Cuomo said Wednesday. The Senate plan, which still needs a vote before it goes to President Trump, would give New York $3.8 billion, a “drop in the bucket” compared with the up to $15 billion Cuomo says the state needs for the crisis. He’s already spent $1 billion.

      “How do you plug a $15 billion hole with $3.8 billion? You don’t,” Cuomo said. “The House bill would give us $17 billion. That’s a dramatic difference.”

      The rapid infection spread has hastened the approach of the “apex” of the crisis in New York, Cuomo said. The wave, now more like a tsunami, could crash on the health care system in three weeks rather than 45 days — and with life-saving supplies already heavily depleted, New York is increasingly desperate for resources to get through just the immediate future. Mayor Bill de Blasio has said he expects the crisis to be worse in April than in March, potentially even worse come May…

      1. would give New York $3.8 billion, a “drop in the bucket” compared with the up to $15 billion Cuomo says the state needs for the crisis

        I didn’t realize it was the fedgov’s job to make states whole. Or that states couldn’t…ya know…plan and do things for themselves?

        The lack of personal responsibility coming out of this ‘crisis’ isn’t surprising, but is very frustrating to observe.

        1. Cuomo says

          Cuomo navigated the state into a very precarious financial situation. Now he’s screaming for a big fat helicopter rescue.

  28. “‘There needs to be some sort of program in place for those who can’t pay their mortgage or rent, but not for those who just don’t want to pay, because that would start an absolute economic spiral,’ he said.””

    Why?

    If you don’t have savings to weather a storm that sounds like a personal problem. You were sooo clever with your appreciation, right? Why weren’t you clever with savings?

    1. I’m with you here. If my LL didn’t save for a rainy day, they get a break, but I did, and I don’t?

      At some point I’m just going to go on an all-out bender so I can at least enjoy my money vs having the gov’t take it from me. If Vegas is still around in a few months, maybe it’s time for an epic week or two…

      1. This thought has occurred to me, too. I am one of those idiots whose entire net worth is in cash, save for a small amount of precious metals.

        1. I am one of those idiots

          Me too, but have shelter, enough tools and hardwoods to do my woodworking forever, and my boat. So I blow off every year, panic or no panic.

    1. This Act may be cited as the “Coronavirus Aid, Relief, and Economic Security” Act or the “CARES Act”.

      What happened to Kung Flu or Wuhan Virus?

  29. Are negative Treasury yields a good development? What subsequently transpired the last time this happened?

    Short-term Treasury yields just turned negative for the first time in 4.5 years amid the coronavirus pandemic
    Carmen Reinicke
    Mar. 25, 2020, 12:39 PM
    Reuters
    – Yields on the one- and three-month US Treasury bills fell below zero on Wednesday.
    – Investors have been rushing into bonds amid the coronavirus pandemic, sending yields to record lows.
    – Japan, Germany, Denmark, France, and Sweden have had negative-yielding government debt for some time.

    Negative yields on government debt have landed in the US.

    On Wednesday, yields on both the one-month and three-month US Treasury bills fell below zero, joining a slew of government debt around the world with yields in negative territory. It was the first time both bills went negative at the same time since their yields briefly fell to -0.002% each four-and-a-half years ago, CNBC reported.

    The slump in short-term Treasury yields comes amid the coronavirus pandemic, which has sent panicked investors flocking to safe-haven assets and out of riskier investments such as stocks. As investors pile into Treasuries, yields have plunged as they are inversely related to price.

    1. In answer to the question I just raised, the only day in history when short-term Treasury yields were lower than today’s was December 4, 2008. And if memory serves, stocks were in for over three more months of cratering immediately thereafter.

      Try not to catch yourself a falling knife.

      Treasuries
      Short-Term Treasury Yields Just Fell Below Zero
      By Alexandra Scaggs
      March 25, 2020 2:00 pm ET
      The yield on the three-month bill fell to the second-lowest on record.
      Photograph by Alex Wong/Getty Images

      Treasury yields have turned lower again, with short-term yields reaching yet another post-crisis milestone: Falling below zero.

      It is rare for short-term Treasury yields to fall into negative territory, though not unprecedented. And it probably is a sign that the coronavirus cash grab hasn’t fully abated, despite U.S. authorities’ efforts to ease the impact of the virus on the country.

      In midday trading, Treasuries maturing in three months were on track for their second-lowest close on record, with a yield of -0.038%. The lowest occurred on Dec. 4, 2008, the height of a global financial crisis, when the three-month yield closed at -0.041%.

    2. The Tell
      Coronavirus stimulus package is ‘short-term bullish’ but stock-market could turn ‘nasty’ in months ahead, analyst says
      Published: March 25, 2020 at 11:31 a.m. ET
      By Chris Matthews
      Technical indicators and unknown resolution to the COVID-19 epidemic point to a retest of recent lows
      The U.S. Capitol Reuters

      The Dow Jones Industrial Average posted its largest one-day point gain on record Tuesday, as investors looked forward to a $2 trillion stimulus package agreed to by senior lawmakers and the Trump administration early Wednesday morning.

      But worrying technical indicators and continued uncertainty regarding the COVID-19 pandemic will make this equities rally short lived, according to Mark Newton, a closely followed independent technical analyst.

      “The [Federal Reserve] and Treasury are literally throwing the bazooka at the economy and stock market,” he wrote, in a Wednesday note to clients. “The White House says the federal government will be spending between $6 trillion and $10 trillion when all the loans, handouts, aid to business and tax relief.”

      The Dow (DJIA, +2.39%) rose 11.4% Tuesday, while the S&P 500 index (SPX, +1.15%) gained 9.4% and the Nasdaq (COMP, -0.45%) advanced 8.1% as investors anticipated federal largesse. All three indexes were trading higher midday Wednesday as well.

      Newton invoked the old adage “don’t fight the Fed” in his analysis of the situation. The federal government is willing to spend such extraordinary sums of money and the Federal Reserve has committed to limitless purchases of U.S. government debt and mortgage-backed securities, while providing relief to the corporate and municipal bond markets as well.

      “It goes without saying that the firepower here is unlike anything we’ve seen before,” and likely to boost the stock market, in the near term, he wrote.

      Looking at market statistics, however, he worries that this rally will ultimately be short-lived. He pointed to a tool of technical analysis called the Elliot Wave Theory, which suggests that prices in markets tend to move in patterns of five waves, “and this bounce from the lows did NOT occur with five waves UP. That’s problematic,” he said.

    3. The Financial Times
      Markets Briefing Equities
      Global stocks falter after two days of big gains
      Senate approval of $2tn coronavirus stimulus comes as fears grow over virus spread
      Japan’s benchmark Topix led Asian stocks lower
      © AFP via Getty Images
      Hudson Lockett in Hong Kong, Leo Lewis in Tokyo and Philip Georgiadis in London
      2 hours ago

      European and Asian markets fell, as a sharp rally in global stocks lost steam despite the passage of a $2tn coronavirus relief package in the US.

      London’s FTSE 100 lost more than 2.5 per cent at the open, giving back some of this week’s gains of 10 per cent. The Stoxx 600 index, which tracks Europe’s largest companies, was 1.9 per cent lower as the region’s major bourses all fell.

      Markets had shot higher this week following nearly a month of sustained losses, as investors have broadly welcomed significant global monetary and fiscal stimulus programmes.

  30. Coronavirus
    Published 1 hour ago
    Coronavirus deaths in the US top 1,000
    By David Aaro | Fox News

    U.S. deaths from the coronavirus pandemic topped 1,000 on Wednesday night as all 50 states have reported confirmed cases of the disease.

    New York City is currently the U.S. epicenter of the virus, with over 20,000 cases and 280 deaths. Over a quarter of all deaths in the country have occurred in the city.

    1. The Financial Times
      Live
      Coronavirus latest: Covid-19 case count leaps by almost 50,000 in 24 hours
      The number of confirmed Covid-19 infections globally has leapt by the biggest magnitude yet in a single day, underscoring how the outbreak continues to worsen worldwide
      – Lombardy medics fight to save patients — and themselves
      – Opinion: Middle East may face an explosion of refugee Covid-19 cases

    1. The Financial Times
      Jacob Wallenberg
      Coronavirus ‘medicine’ could trigger social breakdown
      Jacob Wallenberg tells governments to consider economic threat from crisis
      A picture taken on May 6, 2014 shows Swedish banker and industrialist Jacob Wallenberg in Stockholm. AFP PHOTO / TT NEWS AGENCY / JONAS EKSTROMER +++ SWEDEN OUT (Photo by JONAS EKSTROMER / TT NEWS AGENCY / AFP)
      Jacob Wallenberg: “There will be no recovery. There will be social unrest. There will be violence. There will be socio-economic consequences: dramatic unemployment. Citizens will suffer; some will die” © AFP
      Richard Milne, Nordic and Baltic Correspondent an hour ago

      Jacob Wallenberg has warned governments to weigh the economic threat from coronavirus more heavily or risk depression, social unrest and a potential lost generation.

      The Swedish industrialist, whose family investment vehicle has controlling stakes in companies from telecoms equipment maker Ericsson to bank SEB, told the Financial Times that policymakers must protect the vulnerable but not lose sight of the impact of containment measures on businesses, from neighbourhood restaurants to multinationals.

      If the crisis goes on for long, unemployment could hit 20-30 per cent while economies could contract by 20-30 per cent, he warned.

      “There will be no recovery. There will be social unrest. There will be violence. There will be socio-economic consequences: dramatic unemployment. Citizens will suffer dramatically: some will die, others will feel awful,” he added.

      His warning comes as country after country has closed schools and locked down large parts of society, leading to plummeting demand in industries from airlines to theatres and halted production in many manufacturers such as carmakers in Europe and the US.

      1. Opinion Commentary
        Flatten the Coronavirus Curve at a Lower Cost
        A total shutdown could cost the economy $1 trillion a month. We need more tailored measures.
        By John H. Cochrane
        March 24, 2020 12:29 pm ET

        The bill for the government response to coronavirus will be astronomical. The trillion-dollar “stimulus” is a lot of money, and it will eventually have to be paid for with taxes. The economic shutdowns are even more expensive. The U.S. economy produced about $21 trillion in 2019. If “essential” businesses still open are even half of that, each month of a national shutdown costs the economy almost a trillion dollars. The damage will become harder to fix as businesses fire workers and close forever.

  31. Lying awake thinking about a friend who just lost a son. How do funerals work in the COVID-19 era? How will my friend work through his grief without the in-person support of his community?

    1. The rest of the country is going to look like NY in a couple of weeks, so no time for a shrine. Grieving will come after the battle.

    2. How do funerals work in the COVID-19 era? How will my friend work through his grief without the in-person support of his community? In the part of northern Michigan my parents came from, it was common, when people died during the worst parts of the winter, for funerals and burials to be delayed until much warmer weather. Soil having frozen to a depth of 4 feet, and snow/ice creating a high potential for fatal car wrecks, made this the wisest course of action for many. I have read many news articles about people dying in car wrecks as they were going to/from funerals and memorial services for relatives and friends.

  32. California cases are skyrocketing

    The nation’s most populous state ordered its nearly 40 million residents to stay home to prevent the spread of the deadly coronavirus. The order went into effect last week, meaning Californians should not leave home except for essential things such as food, prescriptions, health care and commuting to jobs considered crucial. The restrictions will remain in place until further notice.
    The number of coronavirus cases in the state is doubling every three to four days, said Dr. Mark Ghaly, secretary of California Health and Human Services.

    “We originally thought that it would be doubling every six to seven days and we see cases doubling every three to four days,” Ghaly said.

  33. How many times can central bankers pull out all the stops before they run out of stops?

    The Financial Times
    Coronavirus
    ECB shakes off limits on new €750bn bond-buying plan
    Central bank gives itself flexibility in bid to contain financial fallout from coronavirus
    Almost all constraints that applied to the ECB’s previous asset-purchase programmes have been removed or significantly loosened
    © AFP via Getty Images
    Martin Arnold in Frankfurt and Tommy Stubbington in London 52 minutes ago

    The European Central Bank has given itself an unprecedented level of flexibility in its plan to buy €750bn in additional bonds to contain the financial fallout from the coronavirus pandemic, which analysts say could leave it open to legal challenges.

    Almost all constraints that applied to the ECB’s previous asset-purchase programmes have been removed or significantly loosened, according to the legal decision detailing the ECB’s latest plan, which was published on Wednesday night in the official journal of the EU.

    The details of the new programme support the declaration by Christine Lagarde, the ECB’s president, who said on Twitter after it was announced last week: “There are no limits to our commitment to the euro.”

    1. How many times can central bankers pull out all the stops before they run out of stops?

      There are no limitations until nobody will trade useful things for dollars any more.

    1. I had planned to renew my driver’s license this week, but all the licensing offices have been closed since last week. So everyone in my boat will just have to drive with expired licenses from this point onward.

      1. Does that invalidate your insurance?

        Can you pay your fees online. You could at lest carry a copy of the receipt.

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