A Farewell to ARM's

[JayB]

"The option-ARM product," Killinger said on the conference call, "is a key flagship product for our company."

 

http://seattletimes.nwsource.com/html/businesstechnology/2004347122_wamu14.html

 

Related:

 

"WaMu annual meeting: director Pugh resigns, executive bonus plan to be revised."

 

 

 

http://seattletimes.nwsource.com/html/businesstechnology/2004350626_webwamu15.html

[sexual_chocolate]

you are on a one man crusade to unearth this debacle in the lending industry!

[KaskadskyjKozak]

you are on a one man crusade to unearth this debacle in the lending industry!

 

He's the Raindawg of ARMs.

[Hugh Conway]

Wonder if we'll have any Winnipeg's out there (real estate picked in 1882 or so and has never recovered it's value)

[tomtom]

you are on a one man crusade to unearth this debacle in the lending industry!

 

He's the Raindawg of ARMs.

 

Desecrating the graves of this crisis.

[JayB]

you are on a one man crusade to unearth this debacle in the lending industry!

 

Seems to be unearthing itself, one reset at a time.

 

Looks like the home-builders are all set though, now that Congress voted to extend the loss-back provision from two to five years at part of the "foreclosure prevention act."

 

More on the way, I imagine. I don't think it will be possible to close the tax-adjusted delta between rents and mortgages with subsidies, but something tells me that Congress will take a mighty run at it.

 

 

[tomtom]

Hey, you gotta prop up those home prices until inflation catches up with them.

[JayB]

True - I think when you combine the subsidies and inflation you might just have enough recklessness on the fiscal and monetary sides to get the job done, at least in nominal terms - which is pretty much all that most people care about.

 

Yeaha.

[JayB]

Wonder if we'll have any Winnipeg's out there (real estate picked in 1882 or so and has never recovered it's value)

 

In real terms, Florida recovered from the 1920's bust in the mid nineties or thereabouts.

 

Between the inventory overhang, hurricanes, and their brilliant plan to have the public assume all of the risk from the said storms (way to stick it to the man!), they're as well positioned as anyone to take the title this time around.

[olyclimber]

I SO enjoy the misfortunes of others.

[tomtom]

18 years after their asset bubble burst, Japan is still suffering because of their unwillingness to deal with their portfolio of bad loans.

 

The advantage, of course, is that Treasury bond rates are so low that we may be mortgaging our future, but we are doing it cheaply.

[JayB]

Yeah - the spread between treasuries and the prime rate is something like 10 standard deviations beyond the normal range. The spread was 5 standard deviations during the height of the LTCM debacle, or so I read somewhere.

 

Treasury yields have got to be close to negative in real-terms.

 

Reverse carry-trade, here we come...

 

 

[Hugh Conway]

I SO enjoy the misfortunes of others.

 

me too.

[KaskadskyjKozak]

I SO enjoy the misfortunes of others.

 

me too.

 

misery loves company

 

[JayB]

I SO enjoy the misfortunes of others.

 

me too.

 

Keep your eyes on Europe, then...

 

[KaskadskyjKozak]

I SO enjoy the misfortunes of others.

 

me too.

 

Keep your eyes on Europe, then...

 

 

He already had his eye on Austria.

[Hugh Conway]

He already had his eye on Austria.

 

Had France is looking much nicer - you can actually own property. Noticing a nice speculative bubble has built in the Mt. Blanc region

[sexual_chocolate]

you are on a one man crusade to unearth this debacle in the lending industry!

 

Seems to be unearthing itself, one reset at a time.

 

of course. so i'll call you The Announcer instead.

 

i am curious as to why this has struck such a deep chord in you, instead of, let's say, asexual reproduction in primates?

[JayB]

Asexual reproduction in primates (or any mammal) would be substantially more interesting. I find the biology of parasitic self replicating elements in genomes - particularly our own - fascinating. The molecular countermeasures that have co-evolved in order to help keep them in check are responsible for mediating sub-cellular defenses against exogenous viruses. In turn, many viruses have evolved mechanisms that destroy or cripple these cellular defenses. But that's not their only role, consider the following:

 

"Endogenous retroviruses are retroviruses derived from ancient infections of germ cells in humans, mammals and other vertebrates; as such their proviruses are passed on to the next generation and now remain in the genome. Retroviruses are viruses that reverse-transcribe their RNA into DNA for integration into the host's genome. Most retroviruses (such as HIV-1) infect somatic cells, but some can also infect germline cells (cells that make eggs and sperm) and once they have done so and have been transmitted to the next generation, they are termed endogenous. Endogenous retroviruses can persist in the genome of their host for long periods. However, they are generally only infectious for a short time after integration as they acquire 'knockout' mutations during host DNA replication. They can also be partially excised from the genome by a process known as recombinational deletion. Many believe that they play a key role in evolution as well.

 

Endosymbiotic ERV's in mammals

During pregnancy in viviparous mammals (all mammals except Monotremes), ERVs are activated and produced in high quantities during the implantation of the embryo. They are currently known to act as immunodepressors, protecting the embryo from its mother's immune system. Also viral fusion proteins apparently cause the formation of the placental syncytium in order to limit the exchange of migratory cells between the developing embryo and the body of the mother (something an epithelium will not do sufficiently, as certain blood cells are specialized to be able to insert themselves between adjacent epithelial cells). The ERV is a virus similar to HIV (which causes AIDS in humans). The immunodepressive action was the initial normal behavior of the virus, similar to HIV, the fusion proteins were a way to spread the infection to other cells by simply merging them with the infected one (HIV does this too). It is believed that the ancestors of modern vivipary mammals evolved after an infection by this virus, enabling the fetus to survive the immune system of the mother. [1]

 

The human genome project found several thousand ERVs classified into 24 families."

 

http://en.wikipedia.org/wiki/Endogenous_retrovirus

 

Isn't that astounding? I actually find that more interesting than ARM resets, but ARM resets are more accessible.

 

 

I've had an interest in mass-hysterias, particularly the financial variety - since reading Charles Mackay's "Extraordinary Popular Delusions and the Madness of Crowds," after hearing about the book (I think it was referenced in the WSJ) about sixteen years ago. I think the interest was only heightened when I had a front row seat consisting of tens of thousands of conversations with individual investors during the height of the tech-bubble.

 

When the deviation of home prices from historical means couldn't be explained by reductions in the interest rates, rising personal incomes or asset values, it started to look to me like we were in a classic bubble, driven by loose credit and mass-psychology. That's interesting in it's own right. Beyond that - I enjoy data driven arguments, particularly when I think I've got the better analysis, and then there's the trainwreck aspect of it all. The last bit would be more intruiging on a remote-analytical level if I didn't think that all of us are passengers, irrespective of whether we've been stoking the furnace or not.

[sexual_chocolate]

It is believed that the ancestors of modern vivipary mammals evolved after an infection by this virus, enabling the fetus to survive the immune system of the mother. [1]

 

Isn't that astounding? I actually find that more interesting than ARM resets, but ARM resets are more accessible.

 

 

perhaps your interest in the current mortgage scenario is as "objective" as you seemingly make it out to be, but i must confess to detecting a touch of schadenfreude in the zeal with which you report on the latest events....?

 

 

in other news, don't you find anything strange in the postulated scenario above? have you any ideas as to how this fetus ended up in a relationship with its host(!) that then required(?) such a symbiotic relationship with a retrovirus?

 

in other words, it doesn't make sense to me that there would have initially been this evolutionary pressure towards intra-host fetal development that only became successful AFTER a retroviral infection?!?

 

i suppose this "infection" occured way way way back in the evolutionary chain, before the appearance of the bilogical complexity we now see?

 

is there a way to date the appearance of this virus? (i suppose others might have come and gone within the genome though?)

 

 

hmmmmmmm....

[JayB]

There's certainly a mix of sentiments there, of which schadenfreude is a part, for sure. It depends quite a bit on whether the party in question was taken advantage of by others who knew better, or whether they knew better and were attempting to take advantage of others. Then there's the subsidies that are completely unjustifiable in economic or social terms, the fraud and conflicts of interest that permeate the real-estate sector, etc. Plenty of grist for the mill.

 

 

WRT ERV's, I think what the author of the above text was trying to say was that it's likely that a germline infection with this particular ERV facilitated or played a significant role in the evolution of the placental interface - not that an embryo infected with the virus somehow got implanted in another organism and the consequent "infection" was the point source of this particular reproductive mechanism.

 

Fascinating stuff, though.

 

More on the topic, if you're interested.

 

http://www.pnas.org/cgi/reprint/103/39/14390'>http://www.pnas.org/cgi/reprint/103/39/14390

http://www.pnas.org/cgi/reprint/103/39/14390

[tomtom]

I've had an interest in mass-hysterias, particularly the financial variety - since reading Charles Mackay's "Extraordinary Popular Delusions and the Madness of Crowds," after hearing about the book (I think it was referenced in the WSJ) about sixteen years ago.

Have you read Taleb's Fooled by Randomness and The Black Swan? Reading can be challenging as he is a bit of a blowhard, but the concepts are interesting to consider.

[Dechristo]

...if I didn't think that all of us are passengers, irrespective of whether we've been stoking the furnace or not.

 

This statement fits well in the thread that considers cognitive decision-making versus instinct.

[Hugh Conway]

Have you read Taleb's Fooled by Randomness and The Black Swan? Reading can be challenging as he is a bit of a blowhard, but the concepts are interesting to consider.

 

hmm. I found them fascinating books and didn't consider him a blowhard, possibly because I've met far too many rote dullards who work in the financial sector so I agree with some of his underlying ideas. I actually think them better books for theories of non-financial risk analysis.

[JayB]

I've had an interest in mass-hysterias, particularly the financial variety - since reading Charles Mackay's "Extraordinary Popular Delusions and the Madness of Crowds," after hearing about the book (I think it was referenced in the WSJ) about sixteen years ago.

Have you read Taleb's Fooled by Randomness and The Black Swan? Reading can be challenging as he is a bit of a blowhard, but the concepts are interesting to consider.

 

Nope - but I'll definitely add it to the list. Thanks for the rec.

 

Heard the author of this book interviewed on NPR the other day, and also added it to the pile, along with this one.