Mr. Market engaged in a world-wide sell off of stocks in the first half of 2008.  The Dow Jones Wilshire Global Total Market Index, which tracks nearly 13,000 stocks in 61 countries, including virtually every exchange-listed stock in the United States, slumped 10.72% in the first half.  Market Watch columnist John Prestbo described the first half as "the bloodbath that engulfed the world's stock markets."  

http://tinyurl.com/...

U.S. stocks lost 10.92%
Developed markets other than the United States lost 9.93%
Emerging markets fell 14.48%.

Recent diaries, such as this one have tackled the current foreclosure crisis.
This diary is an attempt to explain how we got where we are from the point of view of a former Fannie Mae employee. Today I will tackle a much-abbreviated version of the foreclosure crisis and the (possible) role of Fannie, Freddie and HUD in allowing it to happen. I tried to document as much as possible but couldn't find sources for some of the stuff I was told as a Fannie Mae employee.  If ANYONE has sources about these things (or counter sources--memories are an imperfect source) PLEASE put in the comments field. In a later diary I will tackle how to avoid getting into a foreclosure mess AND how to pay off your fixed-rate mortgage up to seven years early without really feeling it.
I worked at Fannie Mae from 1991-94 in an administrative job, leaving to take a job in my field of graduate study.  At the time Fannie was rolling in dough, primarily because of the Mortgage-Backed Securities business. Fannie Mae and Freddie Mac, the two private companies who originated as government agencies during the Roosevelt administration, were at that time the main issuers of Mortgage-Backed Securities, also known as MBS.

Some stories just shock you enough to have to mention something about them, to think they're more indicative of something than the singular tragedy for one family.  What I just read on Boston.com is one of those stories.

A 53 year old woman, a wife and mother, from Taunton, Massachusetts, faxed her mortgage company at 2:30 PM yesterday saying before the 5 PM auction of her home began she would be dead.  When the company received the fax they called police within an hour.  When the police got to the home, she was already dead, 1 1/2 hours before the auction would have started.

http://www.boston.com/...
(more)

Not too long ago my wife and I were on the brink of foreclosure.  I know what that experience is like and I know how my wife and I reacted.  For those of you who have never experienced this kind of thing I would like to share our emotional reaction to this traumatic event.

You think you're going to be sensible.  You think that you'll have a clear head and that you'll explore all the options.  No one pictures themselves acting like complete idiots, putting their heads in the sand until it's too late.  But unfortunately, it happens anyway.

We need to equip our nation to succeed in life.

The Fannie and Freddie show is not over yet.

In an article in the Telegraph today, Ambrose Evans-Pritchard warns that the the US Treasury may have just days to act before foreign patience snaps

Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.

Brian Bethune, chief financial economist at Global Insight, said the US Treasury had two or three days to put real money behind its rescue plan for Fannie and Freddie or face a dangerous crisis that could spiral out of control.

Please read the full article. It is enlightening, and scary.

Cross-posted at South Shore Progressive

"Mental recession."
 
"Nation of whiners."

Sen. Phil Gramm uttered those contemptible sentiments this week.

Ahhh, the smell of irony during election season.....

It's especially ironic from where I sit, since most of my working life has been centered around the mortgage industry. I'm in the unenviable position of watching the housing market implode, watching my property value drop virtually every day, and earning my living by helping other folks finance a home!

So, to hear those words from the mouth of the very person who was instrumental in engineering this mess (among others) to feather his own nest is beyond belief.

I found the news about IndyMac intriguing this morning.  Mortgage lender IndyMac of Pasadena, California has been diving down the path of illiquid insolvency since this time last year (here's a chart I posted elsewhere showing the skid as a reflection of stock price). The gradual failure prompted a letter from a Senator (Schumer, NY) a few weeks ago, which precipitated a run on this bank. The bank was seized by FDIC regulators yesterday subsequent to the run. This is the second largest bank failure in history.

John Reich, director of the Office of Thrift Supervision, a chronic Republican community banker who spent twelve years working for Republican Senator Connie Mack's staff, and appointed by President Bush in 2005, blames Schumer for the run on the bank. But looking at the institution's stock price over the past year, one readily sees that investors have known the place was cascading towards Armageddon for the past year.  In fact, it was Reich (BTW, it's pronounced "rich," and isn't that rich?) himself who...

Appearing in tomorrow's paper is a piece by Joe Stephens titled "Obama Got Discount on Home Loan" which is already being torn apart. It hasn't even made its way to press.

The campaign released the loan documents.

For over a year now, we've had the financial and general media referring to the collapse of the real estate bubble as "the subprime crisis". It's been said so often that it's now the accepted truth.

The storyline has been that the entire problem with real estate has been "subprime borrowers with poor credit" who are "losing their homes." So everybody with good credit is A-OK, right?

Wrong.

Welcome to Housing Crash 2.0... "the Alt-A mortgage crisis."

Honor and ethics are very important to me. As I wrote on my personal blog earlier this week, the Gospel shows us that few things are more immoral than the abuse of power. When corruption scandals beset DC, I am usually very swift to condemn the accused, even if they are members of my own party - case in point, while in New Orleans, I volunteered for Karen Carter's 2006 midterm campaign to unseat Rep. William "Dollar Bill" Jefferson (D-Refrigerator).

Sometimes, however, ethics scandals are just a bunch of trumped-up hooey designed to generate headlines no matter what the personal cost, and that's exactly what we see unfolding today. The protestors, bloggers, and GOP aides trying to smear Senators Chris Dodd and Kent Conrad right now should be ashamed. Dodd and Conrad are two of the most honorable people in Washington, DC, and I do not for an instant believe either one knowingly or purposefully did anything wrong. This is especially true of Conrad, who has been a model of honesty in the way he has handled this scandal.

I talked with a childhood friend today. He and his wife both hold batchelors degrees and he a masters in business. They are both licensed real estate brokers. His wife runs their real estate and mortgage company and he works full time in the constuction industry. Or I should say he did until a few days ago....

In response to the mortgage crisis, was the "reform" in the direction of regulating adjustible rate mortages?

One of the best articles to show your friends about John McCain is about how his economic policy was shaped by lobbyist Phil Gramm:

Republican presidential candidate Sen. John McCain’s national campaign general co-chair was being paid by a Swiss bank to lobby Congress about the U.S. mortgage crisis at the same time he was advising McCain about his economic policy, federal records show.

I guess McCain has to ask someone for help, since he admitted "I never really understood economics,"  but Gramm was reponsible for helping to kill the 2007 "Helping Families Save Their Homes in Bankruptcy Act."

This is a very interesting story.  One of Hillary Clinton's Congressional superdelagates has had one house foreclosed, and is facing foreclosure on two more.

Housing woes mount for Rep. Laura Richardson

I don't want to see anyone in financial trouble, but I am having a hard time feeling much in the way of sympathy or empathy for her.

Though the DailyKos community is broad, it should be reasonable to expect that a huge majority would agree that Franklin Delano Roosevelt was the greatest president we have ever had.  Many would, in fact, agree with the view that the "greatness" of this nation, founded on an idealism which was not completely realized through slavery, a civil war, and the turmoil of modern industrialism, was a function of the Roosevelt administration, in putting the government between otherwise unchecked forces which preyed upon our citizens, and, eventually in establishing our country as the ultimate force in protecting freedom around the world.

I am bummed out this week. I sold my house that my partner and I remodeled over the past 2+ years. Last night I cried with my realtor as I showed her this diary in my office.

Johnnie and I have worked hard to build our sanctuary from the storm, but the storm caught up with us.

We are in business litigation, so Johnnie and I are sueing my business partner. We are being forced to sell our home to pay all the damned attorney bills. I have little faith in the word Justice anymore.
I am holding out for a settlement or a buyout.

I wish I could blame George Bush but it really is a personal business dispute.

Oh WTF! It's all George Bush's and the Republican Party's fault!

Luckily I got a contract (in this crappy real estate market) for almost full price, however it is little consolation. What's money? As printers it is just paper and ink to me.

This is my sad farewell to a lot of sweat equity and a place that I thought I would stay a long time. A place where we have put in our hearts and souls.

Goodbye my Shangri-La...

Last December, Fannie Mae and Freddie Mac announced the reinstatement of its Declining Market policy presumably based on the foolishness occuring in the mortgage-backed securities market.  In a nutshell, this announcement reinstates a policy to reduce the maximum loan-to-value (LTV) ratio in markets Fannie deems to be "declining" by 5%.  What does that mean? Well, if you were applying for a loan with a maximum LTV of 100%, it means that your maximum LTV would be 95%. You would need to put 5% down.  As of June 1, the policy goes into full effect.