The job market shifted in 2009 from the heaviest cuts in almost a decade to one in which signs of recovery were, though limited, struggling to be seen. It isn't turning around yet, and unemployment could still go higher, but it seems that the worst is behind us.

According to Challenger, Gray & Christmas, the job market should come around in 2010, as job creation finally pulls ahead of job losses. Increased hiring, which is expected to gain momentum next year, may take a while to move the needle on unemployment, though, since there are millions of people who have been out of work so long that they are no longer counted as unemployed for the official number that now sits at 10%.

Continue reading Job Market on the Mend, but Wait for 2011

Job Market on the Mend, but Wait for 2011 originally appeared on BloggingStocks on Wed, 23 Dec 2009 13:00:00 EST. Please see our terms for use of feeds.

Angelo Mozilo's nine lives may be about to run out. So far the CEO of Countrywide (NYSE:CFC) has avoided the most severe taint from the collapse of his mortgage company and its questionable practices.

The State of Illinois, the land of Lincoln, will bring civil charges against Mozilo and the firm he started. According to The Wall Street Journal, In a draft of the complaint, Illinois alleges that the company engaged in "unfair and deceptive practices" in the sale of mortgage loans.

One of the main pieces of the complaint is that mortgage brokers pushed loans on people, even it they could not afford them.

Of course, as is always true with charges bought by attorneys general, there is some politics behind the claim. There have been a number of Countrywide foreclosures in the Illinois.

To some extent the politics do not matter. Based on other investigations of Countrywide, it appears that management did quietly push its people to move loans out like cars off an assembly line.

What is most troubling is that no one in government anywhere caught onto the practice earlier.

Douglas A. McIntyre is an editor at 247wallst.com.

Illinois goes after Countrywide (CFC) and CEO Angelo Mozilo originally appeared on BloggingStocks on Wed, 25 Jun 2008 08:35:00 EST. Please see our terms for use of feeds.

The New York Times reports that Federal National Mortgage (NYSE: FNM) and Federal Home Loan Mortgage (NYSE: FRE) have a tiny sliver of capital to support a mountain of mortgages. To put it in perspective, their level of borrowing is almost twice that of the enormously over-leveraged investment banking and hedge fund industries. With the collapse of the housing market, Freddie and Fannie are in trouble. And when you get to the scale of these two, so is America.

As I posted last month, it could cost $1 trillion to bail out Fannie and Freddie. These hybrid organizations are a key cog in the mortgage industrial complex (MIC) that has gotten the world into its current capital crisis. Fannie and Freddie buy "conforming" mortgages from their originators and then package and sell the mortgages as securities. But these two have a mere $83 billion in capital to support $5 trillion worth of debt and other commitments.

This 60-to-1 ratio is almost twice the 32-to-1 ratio of the highly leverage investment banks and hedge funds. And like any company with hard-to-value assets, Fannie and Freddie have unrealized losses. In their case, those total $20 billion -- they've already taken $9 billion worth so far this year. By 2007 they had guaranteed or invested in $717 billion of subprime and Alt-A loans, up from almost none in 2000. And many of those are not worth that much.

Continue reading Fannie and Freddie 60-to-1 leverage could drive $1 trillion bailout

Fannie and Freddie 60-to-1 leverage could drive $1 trillion bailout originally appeared on BloggingStocks on Tue, 06 May 2008 09:13:00 EST. Please see our terms for use of feeds.

Countrywide Financial Corp. (NYSE: CFC) Angelo Mozilo sure comes across like a selfless champion of the underdog on his company's website, which points out that he founded the company in 1969 "on the principle that every family in America desiring to achieve the dream of home ownership should have the opportunity to do so." This year, that dream turned into a nightmare for many Countrywide borrowers and investors.

Shares of the Calabasas, Calif.-based company have slumped 77% this year as the subprime mortgage meltdown worsened. Many investors have been hurt, with the exception of Mozilo. The New York Times reported in October that SEC had opened an informal investigation into the timing of Mozilo's stock sales, "which allowed him to gain more than $132 million in the months before the price plummeted amid the deepening mortgage crisis."

The company threw its beleaguered borrowers a bone on October 23, allowing about 52,000 customers with subprime loans to refinance into prime or government-backed mortgages through next year, and gave more affordable terms to another 30,000 either behind or in danger of becoming behind in their mortgages. As Senator Chris Dodd (D-CT), a candidate for president, noted, the problem extends well beyond the people the company has agreed to help.

Continue reading Money Losers of 2007: Countrywide's Angelo Mozilo has a tough road ahead

Money Losers of 2007: Countrywide's Angelo Mozilo has a tough road ahead originally appeared on BloggingStocks on Fri, 21 Dec 2007 09:40:00 EST. Please see our terms for use of feeds.

UBS (NYSE: UBS) is the latest big bank claimed by the subprime mortgage fiasco. It will write-down $10 billion in assets. It is also bringing in an investment of $11.5 billion, lead by the government of Singapore.

According to Bloomberg , "UBS scrapped a forecast for a fourth-quarter profit and may post a full-year loss."

"The industry has been moving to more aggressive markdown rates'' on subprime-related assets, Kinner Lakhani, a London- based analyst at ABN Amro told the news service.

The news raises two questions. The first is whether the action by UBS will precede more write-downs at big US banks, probably in the fourth quarter. It is certainly a sign that the values of subprime assets are not better than they were at the end of the last quarter. And they may be getting worse.

The other, more vexing question is at what point will investments from Asia and Middle Eastern interests, flush with cash, become at cross purposes with banking interests? Obviously, US financial authorities would not allow a fund controlled by the Singapore government to own a big US bank outright. But in a crisis, that may mean that the US government would have to step up with capital of its own.

Douglas A. McIntyre is an editor at 247wallst.com.

UBS (UBS) to take massive subprime write-down originally appeared on BloggingStocks on Mon, 10 Dec 2007 04:13:00 EST. Please see our terms for use of feeds.

Value investors lose big on financial stocks originally appeared on BloggingStocks on Wed, 28 Nov 2007 17:53:00 EST. Please see our terms for use of feeds.

More trouble for Countrywide Financial originally appeared on BloggingStocks on Wed, 28 Nov 2007 12:00:00 EST. Please see our terms for use of feeds.

Continue reading Media World: Is the media to blame for the housing crisis?

Media World: Is the media to blame for the housing crisis? originally appeared on BloggingStocks on Fri, 09 Nov 2007 12:19:00 EST. Please see our terms for use of feeds.

AIG (NYSE: AIG) is recently down $0.56 to $63.28. Smith Barney says, "AIG has yet to provide investors with an earnings release date for 3Q '07 results. In the wake of the subprime meltdown, investors are eager to asses the fate of AIG's $29 billion of subprime mortgage exposure and its credit guaranty business." AIG call option volume of 13,468 contracts compares to put volume of 36,042 contracts. AIG November option implied volatility of 44 is above a level of 33 from last night and above its 26-week average of 22 according to Track Data, suggest larger near term risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Option update 10-25-07: AIG puts up on subprime concern originally appeared on BloggingStocks on Thu, 25 Oct 2007 13:27:00 EST. Please see our terms for use of feeds.

Lenders are feeling the heat to modify loans, but as the numbers mount loan servicers are finding they are helping more people but falling behind on the percentages. For example, Larry Litton of Litton Loan Servicing told USA Today that historically his company has been able to help 60% of homeowners avoid foreclosure, but today because of tougher lending standards, falling home prices and poorly underwritten loans, he only can modify about 45% of the bad loans on his books.

Countrywide (NYSE: CFC) does feel the pressure, and is the first major lender to announce that it will refinance or modify $16 billion in subprime ARMs that will reset through next year. Now if other lenders and investors would jump on that bandwagon maybe we really would have a solution and prevent a further deterioration in the housing markets. Countrywide will contact borrowers who are current on their loans but facing a rate reset to discuss options. It expects to refinance about $10 billion in loans and modify another $4 billion.

Countrywide's solution answers what the FDIC wants. Sheila Bair, chair of the FDIC, told USA Today that she wants lenders to covert people to fixed rates now who are paying on time before the ARM resets. That's 80% of people currently in ARMs that will be reset in the next year.

Continue reading Countrywide responds to pressure to help borrowers avoid foreclosure

Countrywide responds to pressure to help borrowers avoid foreclosure originally appeared on BloggingStocks on Tue, 23 Oct 2007 08:58:00 EST. Please see our terms for use of feeds.

Although the Federal Reserve can seek to provide a more stable economic background that will benefit both investors and non-investors, the truth is that it can hardly insulate investors from risk, even if it wished to do so. Developments over the past few months reinforce this point. Those who made bad investment decisions lost money. In particular, investors in subprime mortgages have sustained significant losses, and many of the mortgage companies that made those loans have failed. Moreover, market participants are learning and adjusting--for example, by insisting on better mortgage underwriting and by performing better due diligence on structured credit products. Rather than becoming more crisis-prone, the financial system is likely to emerge from this episode healthier and more stable than before.

Ben Bernanke never promised you a rose garden originally appeared on BloggingStocks on Tue, 16 Oct 2007 08:10:00 EST. Please see our terms for use of feeds.

Continue reading Does America need a 'Mortgage Czar' to bail out foreclosures?

Does America need a 'Mortgage Czar' to bail out foreclosures? originally appeared on BloggingStocks on Thu, 04 Oct 2007 13:31:00 EST. Please see our terms for use of feeds.

You have to love academia. With the subprime meltdown in full swing and Americans with ARM and/or pay-option mortgages finding their homes in jeopardy, Tomasz Piskorski of Columbia Business School and Alexei Tchistyi of New York University's Stern School of Business have come out with a 65-page paper full of equations to demonstrate that no, actually these so-called toxic mortgages are the best ones out there.

The authors of the study argue that, in a perfect world, these mortgages are great -- sounds a little bit like what some people say about communism. Pay-option ARMs work great if people behave rationally -- act in the own best interests, behave with self-discipline, and pay more than the minimum whenever possible.

That sounds like most of the subprime borrowers you know? Yeah, that's what I thought. The professors say that, with proper education, these loans could be attractive. According to Piskorski:

"Obviously people are to some extent irrational. But if you want to ban this type of contract, you should really weigh the benefits and the costs. How much could you educate people? Make people understand them. Provide them with software. Make a federal law that requires the lender to reveal what this contract is about."

But most people know shockingly little about finances. According to a Jump$tart survey, "Only 14.2% [of high school students] felt stocks are likely to have higher average returns than savings bonds, savings accounts, and checking accounts over the next 18 years in spite of the fact that there has never been an 18 years period when this was not true."

So educating people about pay-option ARMs seems a little ambitious.

Academics say ARMs are the best mortgages? originally appeared on BloggingStocks on Sun, 23 Sep 2007 10:40:00 EST. Please see our terms for use of feeds.

The New York Times [registration required] reports that the subprime meltdown has zipped across the Pacific to wipe out the fortunes of Japanese housewives who trade currencies after putting their children to sleep. Betting an average of $9.1 billion a day -- 20% of daily foreign exchange (FX) volume -- on a decline in the Yen relative to the dollar, many of these housewives were wiped out when the August credit crunch caused U.S. hedge funds to panic -- driving up the Yen's value and tanking their trades.

Japanese online investors lost $2.5 billion trading currency in August. And for many Japanese households, housewives' FX trading had been kept in the closet. Japanese tradition frowns on making money through means other than hard labor -- such as market speculation.

But this taboo is out in the open thanks to Mayumi Torii, according to the Times, a 41-year-old mother of one who said she earned $150,000 since she started margin trading in currencies early in 2006. Torii now appears on TV promoting her FX Beauties Club so she can "stand on my own economically," a necessity she discovered after her first marriage ended in divorce, and she and her son had to live off her meager savings. "I never want to feel that vulnerable again," she said.

Continue reading Subprime plunge pings Japanese housewives

Subprime plunge pings Japanese housewives originally appeared on BloggingStocks on Sun, 16 Sep 2007 09:15:00 EST. Please see our terms for use of feeds.

Thornburg Mortgage Inc. (NYSE: TMA) Chief Executive Larry Goldstone said there is a "crisis of confidence" in the mortgage market.

No kidding.

Shares of Thornburg fell about 9% after Goldstone made that insightful comment on CNBC. They are down 45% for the year amid concerns about the subprime mortgage meltdown. Thornburg sold about $20.5 billion in mortgage-backed securities today to return to "business as usual" -- whatever that means.

Worries about subprime mortgages continued to weigh-down the market, as did the drop-off in oil prices caused by weather forecasts that indicated Hurricane Dean wouldn't hit the oil-producing areas of the Gulf of Mexico. The Dow Jones industrial average and the Nasdaq Composite Index managed to hang onto positive territory for now as investors continued to hope -- make that pray -- that Fed Chairman Ben Bernanke will eventually cut interest rates.

Continue reading Thornburg (TMA) CEO sees 'crisis of confidence'

Thornburg (TMA) CEO sees 'crisis of confidence' originally appeared on BloggingStocks on Mon, 20 Aug 2007 11:54:00 EST. Please see our terms for use of feeds.

Continue reading As market volatility continues, 'downtick' rule draws scrutiny

As market volatility continues, 'downtick' rule draws scrutiny originally appeared on BloggingStocks on Thu, 16 Aug 2007 13:12:00 EST. Please see our terms for use of feeds.