The tradition of Christmas, first mentioned in English in 1043, is a combination of earlier, mostly pagan, traditions which were appropriated by the Christians for the purpose of stamping them out.

Arguably Christmas has now been appropriated by the corporate world as a marketing tool to promote an annual orgy of spending and wasteful consumption. Bah Humbug, I say.

By all means let us burn the Yule log (pagan, Scandinavia), hang the boughs of holly and mistletoe (pagan, Celtic), decorate our Christmas tree (origins unclear, first reported Germany 16th. century). But most of all, perhaps, we should think about Santa Claus (just a corruption of Saint Nicholas). Saint Nicholas was bishop of the city of Myra, in the Roman province of Lycia, in the third century. He was venerated for, amongst other things, making anonymous gifts to the poor. Somehow, this has been “lost in translation”.

Friday’s economic reports showed a fall in the personal savings rate, to -1%. This means that consumption continues to be sustained by borrowing and/or liquidation of investments, otherwise know as eating the seed corn. The personal savings rate has been negative for 20 months now. How can people believe that this will not have consequences?

Bloomberg: Strategists at 12 of the biggest Wall Street firms agree that U.S. stocks will rally next year. The last year that happened was for 2001, when the Standard & Poor’s 500 Index dropped 13 percent.

The following table shows the S&P 500 forecasts for 2007 from all 12 strategists surveyed.

The Comptroller of the Currency - John Duggan - has recently given a speech (note: pdf) where he discussed the growth of exotic mortgages in the last few years. The Comptroller of the Currency is one of the leading regulators of US banks, along with the Fed. This speech shows that even regulators - who have been effectively “asleep at the stick” for the last few years while the housing and mortgage bubble was blistering - are now getting worried about the state of mortgage finance. Per Mr. Duggan:

• 5% of mortgage originations in 1994 were sub-prime; that is now up to 20%.
• Interest-only and payment-option ARMS were 2% of loan originations in 2000, they now account for 40%.
• 20% of payment-option ARMs originated in the past two years have loan value greater than home value, a figure that would double to 40% if home prices were to decline another 10%. Thus many mortgage holders have significant negative equity in their homes.
• 50% of the sub-prime market is now made up of ‘stated income’ mortgages where “the borrower pays the lender not to verify the borrower’s stated income on the loan application, making it possible for the borrower to artificially inflate the size of his or her income in order to qualify for a bigger mortgage.”
• A study by the Mortgage Asset Research Institute found that 60% of applications for these ‘stated income’ loans exaggerated income by at least 50%.
• The increase in debt-servicing (”payment shock”) coming from negative amortization mortgages can be severe: if rates are reset even only by 2 percentage points the payment increase will amount to a near doubling of the amount of the initial monthly payments.

Image borrowed from Calculated Risk.

NEW YORK (MarketWatch) — “Federal regulators said Monday they have filed charges against three former Fannie Mae (FNM) executives, former Chairman and CEO Franklin Raines, former Vice Chairman and Chief Financial Officer J. Timothy Howard, and former Senior Vice President and Controller Leanne G. Spencer. The Office of Federal Housing Enterprise Oversight (OFHEO)said the charges, ‘reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public.’ OFHEO said it will seek civil penalties of up to $100 million from the former executives, and the return of bonuses totaling up to $115 million from the three.”

It is interesting, though, that the SEC isn’t involved and it is left to the obscure OFHEO to step up to the plate. Remember that the SEC is only after vulnerable bulletin board pump ‘n dumpers, not the wealthy and politically connected unless they do something to make it personal (like Martha, who got smart with them).

Mr. Potato Head, you have it coming.

We spent the last four days in Fort Lauderdale, mostly looking at apartments for a possible future home. So we spent a fair amount of time driving around the city, obviously mostly in the nicer areas. $2,000 per month currently buys you a nice 2-bedroom apartment in a top of the line building, full amenities, concierge, etc. etc. either downtown or beach areas. Full ocean view is more than that. We didn’t look at houses because we didn’t expect to be in FLL fulltime and wanted a “lock and leave” situation, but I would estimate that one in ten houses were for sale. The same $2,000 will buy a 3-bedroom house with pool and dock, ocean access, but not in the prime areas, more up in Pompano Beach for example.

Looks like condo overbuilding is getting ever more extreme, construction is still underway. Trump is breaking ground, a little late one would have thought.