cramer meltdown

[alocispepraluger102]

The real issue is the condition of the Wall Street holders of the "mortgages". Bunches of hot shots will lose money.

Well, that's all Cramer's interested in. He doesn't care about the people who lose their homes. He cares about the Countrywides and the mortgage companies where he's got his money invested.

Still, he's right about Bernake and the Fed. 17 straight increases without a single cut. They're likely concerned about the dollar. I say who cares about the dollar. If it falls low enough we might actually have some foreign countries set up their companies here again. The unemployed need a lower dollar and they need jobs.

isnt countrywide one of the more secure ones?

[Jim Alfredson]

It's kinda unreal to expect to buy a house with hardly no downpayment and a low(starting) interest rate.

It's also kinda unreal to expect the average American to buy a house that costs a minimum of three times what they make, yet that is where we are today. The price of homes across the country is insane compared to what we make.

[MoGrubb]

......

It's also kinda unreal to expect the average American to buy a house that costs a minimum of three times what they make, yet that is where we are today. The price of homes across the country is insane compared to what we make.

Actually, three times the earnings isn't all that much figuring the average smuck buying a house probably earns 35K per year, times three is only 105K. Depending on the area, of course, 105K is an average house cost and pretty attainable. I guess it's the variable interest that the coup de grâce.

[Jim Alfredson]

I don't know where you're living, but the median price of a home in the US is around $200,000. My grandparents paid under $10k for their house in 1950. That's about $80,000 in today's money. Then consider that they bought it with only one person earning an income. Try doing that today. That's why all our kids our growing up in daycare. The bullshitters like to say that if you adjust for inflation, the average household income has gone up since WWII. But what they don't say is that now we have both parents working full-time just to make ends meet.

The average wage in the 1950's was around $3000 a year. That's about $25,000 in today's money. Could anyone making $25k possibly afford a new car, a new house, and live at a comfortable standard of living now? But my grandparents did it.

Again, the middle class is slowly but surely disappearing. The gap between the rich and poor continues to widen. And it's going to lead to serious trouble for the country.

[Claude]

It's kinda unreal to expect to buy a house with hardly no downpayment and a low(starting) interest rate.

It's also kinda unreal to expect the average American to buy a house that costs a minimum of three times what they make, yet that is where we are today. The price of homes across the country is insane compared to what we make.

But in other countries it is much worse. Ten years ago, my appartment (2 bedrooms) cost 5 times my annual salary. In Spain, many people are forced to take a 50 year loan to be able to afford to buy a home. Is the US situation really insane in that respect?

[BERIGAN]

I thought it was a thread about Michael Richards running amok again...

Yep; that's what I clicked for!

Me three! I forgot it's spelled with a K....

[Jazzmoose]

The real issue is the condition of the Wall Street holders of the "mortgages". Bunches of hot shots will lose money.

I'm sure we can depend on our government to bail out the bigshots while assuring those losing their homes that they're better off without depending on the government to solve their problems...

[MoGrubb]

The real issue is the condition of the Wall Street holders of the "mortgages". Bunches of hot shots will lose money.

I'm sure we can depend on our government to bail out the bigshots while assuring those losing their homes that they're better off without depending on the government to solve their problems...

The ole pissing on your leg, telling you it's raining bit.

[Dan Gould]

......

It's also kinda unreal to expect the average American to buy a house that costs a minimum of three times what they make, yet that is where we are today.

My grandparents paid under $10k for their house in 1950 ... The average wage in the 1950's was around $3000 a year.

Yup, house price about 3X yearly wage.

[Jim Alfredson]

Yep, with only ONE person working. Now days most homes have TWO people working full time and yet with those combined household incomes, the price of a home is still three times what the home brings in. Do you see the difference?

[JSngry]

Yep, with only ONE person working. Now days most homes have TWO people working full time and yet with those combined household incomes, the price of a home is still three times what the home brings in. Do you see the difference?

The simplest reduction of all this would be to say that the cost of a typical home has risen from 3X a typical person's typical income to 6X that same typical person's typical income, no?

[Jim Alfredson]

A little bit more; I read an article in Time a few years back that said in comparison to wages, the price of a home has risen 77%.

[MoGrubb]

I wonder if the gov used to regulate the housing industry somehow or other? It used to prevent and breakup monopolies and regulated food(still does, milk)and gas, if I'm not mistaken. I hope our little country hasn't gotten as good as it can get and is on the downside.

Edited August 7, 2007 by MoGrubb

[Guy Berger]

Who is "Bill Pool"?

Bill Poole is the President of the St. Louis Fed and a notable inflation hawks.

Guy

[Guy Berger]

I wonder if the gov used to regulate the housing industry somehow or other? It used to prevent and breakup monopolies and regulated food(still does, milk)and gas, if I'm not mistaken. I hope our little country hasn't gotten as good as it can get and is on the downside.

Beyond ensuring that people who take out mortgages aren't bamboozled by the details of their loans, I'm not sure what can really be done.

Guy

[Chuck Nessa]

Beyond ensuring that people who take out mortgages aren't bamboozled by the details of their loans, I'm not sure what can really be done.

Guy

Do we really need to insure our citizens against stupidity?

Dealing with "reality", we will insure them if "Wall St" will be damaged. What a bag of crap.

[ghost of miles]

Don't forget that Greenspan was encouraging people to take out ARMs a year before the '04 elections. Nice!

[Guy Berger]

Beyond ensuring that people who take out mortgages aren't bamboozled by the details of their loans, I'm not sure what can really be done.

Guy

Do we really need to insure our citizens against stupidity?

I said "ensure", not "insure" -- two totally different words. It's pretty clear that many people have trouble understanding financial contracts and that at least in some cases, homebuyers ended up being misled or poorly informed by lenders.

I agree with you that once reasonable disclosure of risks has been made, our government shouldn't be in the business of protecting people from their own idiocy.

Guy

[alocispepraluger102]

Beyond ensuring that people who take out mortgages aren't bamboozled by the details of their loans, I'm not sure what can really be done.

Guy

Do we really need to insure our citizens against stupidity?

Dealing with "reality", we will insure them if "Wall St" will be damaged. What a bag of crap.

decent mandatory basic economics courses for high school students (and high school teachers) would be a good place to start.

[Chuck Nessa]

I said "ensure", not "insure" -- two totally different words.

Guy

I understand the difference but when we involve the government (or business) one becomes the other.

[Swinging Swede]

I thought it was a thread about Michael Richards running amok again...

Yep; that's what I clicked for!

Me three! I forgot it's spelled with a K....

Here's a clip for you guys then!

http://www.youtube.com/watch?v=mPHi6ibR7nY

[Guy Berger]

I read his book Real Money maybe six months ago.

He wants you to play the market every day - sell on every downturn, buy on every up-turn. My understanding is that amateurs never make money doing that. Maybe some of you disagree.

Amateurs definitely don't make money doing that, unless they are extremely lucky.

Guy

[Guy Berger]

Still, he's right about Bernake and the Fed. 17 straight increases without a single cut. They're likely concerned about the dollar. I say who cares about the dollar. If it falls low enough we might actually have some foreign countries set up their companies here again. The unemployed need a lower dollar and they need jobs.

I don't think the Fed cares very much about the dollar, if you mean the exchange rate. (As long as there are no huge, sudden swings in its value.) The Fed DOES care quite a bit about inflation.

FWIW, a depreciation of the dollar against other currencies would have mixed effects. Driving up the price of imports (foreign currencies becoming more expensive) would probably have some of the effects you suggest, but it would also hurt the pocketbooks of many Americans. Also, American industries that depend on foreign imports would probably see their costs go up.

Guy

[Jazzmoose]

Beyond ensuring that people who take out mortgages aren't bamboozled by the details of their loans, I'm not sure what can really be done.

Guy

Do we really need to insure our citizens against stupidity?

Dealing with "reality", we will insure them if "Wall St" will be damaged. What a bag of crap.

decent mandatory basic economics courses for high school students (and high school teachers) would be a good place to start.

AMEN!!! The fact that a large segment has difficulty understanding basic money matters is not a matter of stupidity, it's just ignorance. Ignorance can be 'cured' through education. and it's a damn shame that we aren't teaching kids basic money skills, nutrition, etc. I hate to admit it, but these skills would be a lot more useful to most of the population than the quadratic equation or even Shakespeare. In truth, I'm not really arguing for 'instead of' but rather than 'in addition to', but as parents can't seem to educate their kids on these matters (mainly because they, themselves, never learned), it would really be a boon to our society for the schools to step in and take up the slack.

[alocispepraluger102]

as cramer was saying:

AP

Dow Plunges 387 on Subprime Concerns

Thursday August 9, 4:46 pm ET

By Tim Paradis, AP Business Writer

Dow Plunges 387 on Following Renewed Subprime Mortgage Concerns

NEW YORK (AP) -- Wall Street plunged again Thursday after a French bank said it was freezing three funds that invested in U.S. subprime mortgages because it was unable to properly value their assets. The Dow Jones industrials extended its series of triple-digit swings, this time falling more than 380 points.

The announcement by BNP Paribas raised the specter of a widening impact of U.S. credit market problems. The idea that anyone -- institutions, investors, companies, individuals -- can't get money when they need it unnerved a stock market that has suffered through weeks of volatility triggered by concerns about tight credit and bad subprime mortgages.

A move by the European Central Bank to provide more cash to money markets intensified Wall Street's angst. Although the bank's loan of more than $130 billion in overnight funds to banks at a low rate of 4 percent was intended to calm investors, Wall Street saw it as confirmation of the credit markets' problems. It was the ECB's biggest injection ever.

The Federal Reserve added a larger-than-normal $24 billion in temporary reserves to the U.S. banking system.

The concerns that arose in Europe and spilled onto Wall Street underscored the potential worldwide ramifications of an implosion of some subprime loans and perhaps also weakened arguments that strength in the global economy could help keep profit growth going in the U.S. among large companies that do business overseas.

The ECB's injection of money into the system is an unprecedented move, said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co., adding that it shows that problems in subprime lending are, in fact, spilling into the general economy.

"This is a mini-panic," he said. "All the things that had been denied up until this point are unraveling. On top of this, retail sales were mediocre, which shows that indeed, the housing collapse is affecting the consumer."

Retailers released July sales figures Thursday that were overall disappointing.

The Fed didn't soften its stance on inflation after leaving short-term interest rates unchanged Tuesday. However, the renewed credit market concerns spurred bond traders who bet on its next move to predict early in the session that the Fed will cut rates at its meeting next month. Before Thursday, traders had bet on a 1 in 4 chance of such a cut.

According to preliminary calculations, the Dow fell 387.18, or 2.83 percent, to 13,270.68.

Thursday's pullback continued an erratic pattern of triple-digit moves in the Dow since the index closed at a record 14,001.41 on July 19. Eleven of the 15 ensuing sessions have ended in a triple-digit gain or loss. Gains have been evaporating at the first mention of trouble in housing, subprime lending or the credit markets.

With Thursday's decline, the Dow is about 730 points, or 5.2 percent, below its record close. Some experts have been calling for a textbook correction -- a pullback of at least 10 percent. At its lowest close since the market's high, Friday's finish of 13,181.91, the Dow was 5.85 percent below the record.

Bonds rose sharply as investors again sought the relative safety of Treasurys, pushing down the yield on the benchmark 10-year note to 4.79 percent from 4.89 percent late Wednesday.

The broader Standard & Poor's 500 index fell 44.40, or 2.96 percent, to 1,453.09.

Before Thursday, the S&P had its best three-day winning streak in nearly five years. But the latest pullback was the biggest point drop and percentage loss for both the Dow and the S&P since a market pullback on Feb. 27., that owed in part to concerns about subprime loans.

The Nasdaq composite index fell 56.49, or 2.16 percent, to 2,556.49. On Wednesday, it posted its biggest point gain in more than year. And while Thursday's loss was sharp, last Friday's was more severe.

The pullback came after BNP Paribas Investment Partners said it was suspending three funds together worth about $3.79 billion and wouldn't make investor redemptions until it could determine net asset values.

The funds invest in part in subprime mortgages through a process known as securitization. Investment banks bundle together mortgages -- including those from subprime borrowers -- and sell them off to investors such as hedge funds, mutual funds and other institutional investors. Buyers of such securities are seeking the steady flow of income from homeowners making their mortgage payments.

Shares of financial companies, which investors have fled recently amid lending concerns, took another beating Thursday. Citigroup Inc. fell 5 percent, as did fellow Dow component JPMorgan Chase & Co.

In another sign of credit market trouble, Home Depot Inc. warned that the sale of its wholesale business might bring in less than expected. The world's largest home improvement retailer, which also cut how much it intends to pay to repurchase stock, said volatility in the stock, debt and housing markets has led to the possible repricing. Home Depot fell $2.01, or 5.3 percent, to $35.79, and was the worst performer of the 30 Dow components.

But American International Group Inc., one of the world's largest insurers, on Thursday reassured investors that it remains comfortable with its exposure to the subprime lending market as an investor, lender and mortgage insurer. AIG, which reported a 34 percent jump in second-quarter profit late Wednesday, said it has enough cash and liquidity and "does not need to liquidate any investment securities in a chaotic market."

AIG fell $2.18, or 3.3 percent, to $64.30.

The dollar was mixed against other major currencies, while gold prices fell. Light, sweet crude fell 56 cents to $71.59 per barrel on the New York Mercantile Exchange.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to 2.8 billion shares compared with 2.6 billion shares traded Wednesday.

The Russell 2000 index of smaller companies fell 10.79, or 1.36 percent, to 784.87.

The Chicago Board Options Exchange's volatility index, often called the "fear index," rose early Thursday to its highest level since April 2003.

European stocks plunged. Britain's FTSE 100 lost 1.92 percent, Germany's DAX index fell 2.00 percent, and France's CAC-40 fell 2.17 percent after being down more than 3 percent. Japan's Nikkei stock average rose 0.83 percent. Hong Kong's Hang Seng index fell 0.43 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com