Auto Industry Bailout Battle

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and we turn now to the auto bailout or lack thereof and joining us from New York to talk about this Senator Carl L of Michigan with us from Cleveland Senator shered Brown they're both Democrats of course and here in our DC studio uh Senator Bob Corker Republican of Tennessee now Senator Corker you were the one who tried to put together uh this compromise plan uh to get some money to the auto makers but part of that was it called on the unions to take some steep pay cuts uh starting uh next year the whole thing uh collapsed now we're told that the White House says that they're going to try to take some money and I assume it's from this $350 billion bailout that the Congress has already approved and they may uh uh furnish some money to the automakers are you for that because apparently there will not be the conditions that you had set out or at least we don't know of any yet not necessarily and I didn't ask for Steep Cuts By the way uh we had a group that wanted companies to go into chapter 11 reorganization and didn't want to help until that occurred we had another group that wanted to put money on top of a situation uh that would be that would go on forever GM has 62 billion in liabilities and couldn't pay that back in a good economy so what I tried to do was figure out a way to cause the same things to happen that might occur in a chapter 11 reorganization without the stigma or pain and it incorporated three steps number one the bond holders taking 30 cents on the dollar a 70% haircut and and the pay cuts I mean but let's let's look forward here now the White House is now planning some other kind of bailout apparently will you and other Republicans be for that or will you try to block well the the administration uh can do this on their own it's a unilateral thing and again uh pay cuts all we ask is that they were competitive with Honda Nissan Toyota Toyota and BM BMW as determined by the next Secretary of Labor we did not ask for pay cuts we asked that they were competitive uh and and gave great leeway to the next Secretary of Labor to determine that so it was a very reasonable ask have you talked to the White House about this when are they planning to do this well this weekend they're meeting with uh treasury officials and uh the treasury officials are meeting with the companies talking with them talking about where their balance sheets are I don't think uh they yet know what they're going to do I talked to uh the White House this morning I talked to secretary Paulson on Friday and urged that if they're going to take this route I still think the better route is to go through Congress and let us do our work but if they're going to do this other thing that they still impose these same conditions which by the way would be historic and that they would cause these companies in this time of Crisis to get the bond holders to get the management uh to get the employees to work together in shared sacrifice to solve this problem I take it from what you're saying that even if you wanted to stop this now there really is not much you or other Republicans in the Senate could do with a flick of a pen it can be done that's correct and and and so you won't try to block it then oh no and again this hasn't been about blocking I think the uh two gentlemen that are that are coming together with us on this program this has been about trying to find a solution that works and really causes these companies to be in the position to go forward in a healthy fashion but without all of these shared sacrifices that will not happen all right well let's go to Senator L what what's going to happen here he uh Senator Corker says he has talked to the White House it sounds like something is on track there what what can you tell us sener well I think it's very likely the White House will do what it said it's going to do not allow the Auto industry to collapse their press secretary said it would be irresponsible for the uh to allow the Auto industry to Collapse by the way no other country no other country that produces automobiles is allowing its industry to collapse they all have the same problem they're all providing loans to those Industries this is not unique to the United States and I want to uh and that goes even to China by the way Bob even the Chinese Auto industry is asking the Chinese government for loans I want to commend Bob Corker by the way uh he did at the end right right finally on Thursday night come up with a formulation that was acceptable to him uh which was saying that the cuts uh had to be make them the Auto industry competive comptitive that was the word that he used that was a word that was acceptable to Senator Corker it's acceptable to the Democrats and the Senate acceptable to the White House that word was not acceptable to the Republican leaders in the Senate who insisted not just that the Auto industry wages be competitive but that we specify in law precisely that those wages and benefits had to be equal to Nissan and other uh foreign man manfacturers in the United States that is what broke this deal so I commend Senator Corker for coming up with language acceptable to him acceptable to the Senate Dems acceptable to the White House but not acceptable tragically I think uh to the Republican leadership in the Senate all right well let me go to Senator Brown cuz you're not from Michigan I think it's very easy to understand why Senator Levan uh would want to get this help to the huge industry in his home state but you're from Ohio uh what would be the impact in your view uh Senator uh if if these companies do go down not necessarily in Michigan but in other places like Ohio I I talked to two two uh brief stories um Friday night I was at a friend's 70th birthday party and a a a um General Motors Widow retire General Motors retirees widow um talked to me and said I've just been filing this all week because I'm so scared what's going to happen uh to the to my pension um I also last week talked in conference call on Thursday or Friday to 35 auto dealers I'm in my state and they are very fearful of what would happen with the bankruptcy because they think that people simply would stop buying from a from a from a um company at their dealership a company that that might go under a year or two years or five years from now that that they just couldn't trust for for service for parts for all the warranty and all that so um Ohio's no Ohio's a bigger Auto State than most it's not Michigan of course but um it would it would be a terrible thing for for the economy for the confidence in the economy for literally hundreds of thousands of jobs in my state suppliers um many Auto Workers retirees uh what would happen to the perhaps to their pensions perhaps to their health care and the the literally tens of thousands of people that work in dealerships in my state and multiply that across the country so this is a hit our we're already in a deep recession in in my state as we are in most of the 50 states and this would just plunge us deeper into economic problems into a hole that it would take us for a long long time to extricate ourselves from well are you getting the kind of information that Senator Corker is getting that in fact it looks as if the White House is going to do something uh this week yeah I um I walked home after the vote on um Thursday night I a little after midnight I called the White House to urge the White House to move quickly on using tar money which is what many of us I talked to secretary Paulson three or four Sundays ago asking him to do the same and I know that Senator Levan has done that and many others too um and then I talked to the one of one of the white one of the president's top advisers early Friday morning at 7 o'clock he gave indication of of good news coming wasn't specific yet I know we've all been talking to to top White House officials over the weekend as Senator Corker mentioned um I'm optimistic they're going to do something significant I don't think the White House wants some bankruptcy of one of the big three automakers um is part of their legacy and I I know that don't want to leave this for the next president so something I'm I'm hopeful will happen soon um there will be some cram down of creditors there will be some some serious I think um requirements put on the industry and the sacrifice will be shared um pretty equally I hope one of the things that I was thinking about driving in is Senator Corker and I sat in the Banking Committee and listened to testimony from the three CEOs um the United Auto Workers uh see the top executive at Johnson Controls and major Auto suppliers and a supplier and a car auto dealer from uh from Connecticut and each of them uh each of them is willing to give something up as the bond holders are and we don't want to put this just on the workers that's really been the Cs from too many I think how how much do you think what size bailout do you think they're planning I think uh it's in the neighborhood of 14 billion and and I hope that if they choose not to do it through Congress but themselves that they'll put in place exactly the same Concepts uh that we almost agreed to uh the other night and that is if the bond holders do not agree to taking 30 cents on the dollar by March the 15th they have to file bankruptcy uh if labor and and management cannot agree that they would be competitive by date certain uh March 31st taking them into competitiveness even in the next year but that they agree to that by March 31st uh that they will go they they will go into bankruptcy it's that crisis that actually causes everybody to want to come to the table and I do want to say and I thank thank Carl for the nice comments actually what ended up happening our caucus was fine with the words competitive they just wanted it done in a finite time I offered any time during the year ' 09 and it was difficult to get the UAW there but mainly because they knew the White House had these tarp funds and there was really no reason for them to agree to this so they had gotten word from the white they were going to do it anyway and that's what killed the deal in the sen well they knew they had the funds I'm not blaming the White House but they knew that the White House had funds that they could put forth without any strings well johnan thank you very much um thank you we'll F this of course I'm very sorry uh sener uh we have simply run out of time

Car Sales Hit The Brakes

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At Hudson Honda in New Jersey, a lot full of unsold cars has salesmen worried. Are you meeting your sales quotas at this point? Right now, everybody's having a problem meeting their sales quotas. General manager Christopher Tropiano says sales are down 10% compared to last year. He's offering incentives to lure customers back, but still people aren't buying. This is not an easy economy. Absolutely not. It's been, you know, difficult. It's been a challenge. A challenge which has foreign car manufacturers making unprecedented cuts. Toyota is dropping shifts at their Texas plant and reducing all management bonuses. Hyundai is going to a temporary 4-day work week at its Alabama plant. Nissan is reducing production on two brands. And Honda is cutting US production by 12% and dropped its sponsorship of Formula 1 racing. When you look at the at the cuts that they've had to make to production at their double-digit sales declines, you can see that they are not immune from the significant downturn that we've seen in the US market. The country's in an economic recession, but the auto industry is in a severe depression right now. Foreign automakers could be pulled deeper into that depression because of their close connection with Detroit's supply chain. A majority of American suppliers for GM, Ford, and Chrysler also provide parts to Asian car makers. According to a trade group, auto companies owe those suppliers a collective $13 billion. Some fear if the big three collapse, the cashstrapped suppliers will fall too, and foreign automakers won't be able to get the parts they need. We're all dependent upon the same things, the same vendors. So, I think it's in everybody's best interest in order to go ahead and help out the big three. And it doesn't look like foreign car sales are going to improve anytime soon, just like the domestic automakers, Toyota, Honda, and Nissan have announced lower sales forecasts for next year. Jeff Priya, any car makers that actually are selling cars right now. All right, it's going to surprise you, but there are actually two luxury brands that rose just slightly last month. Ferrari and Rolls-Royce. So, if you got the money, those two were a little bit higher than anything else. I'll take one of each. Thanks, Pria. David, thank you very much tonight.

Chairman Of The Board

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Barney Frank has been called the smartest guy in Congress which is lucky for us since he works on some of the thorniest issues around the 14 term 68 year old Harvard educated Democratic congressman from Massachusetts is Chairman of the house Financial Services committee which means his portfolio includes Banks housing and now the Auto industry he's been at the center of both the 700 billion dollar rescue for financial institutions and the bailout attempt for the car companies that failed in the Senate he worked on both this past week pressuring treasury secretary Henry Paulson to deal with home foreclosures and negotiating with the White House on the loan for GM and Chrysler true to textbook liberalism Barney Frank worked hard to keep the car makers out of chapter 11. but I wonder why because when these companies finally get into bankruptcy they can do the tough things that they can otherwise the only one thing you can do in bankruptcy that you can't do outside of Banksy break your word break your deals it allows you to say to the small businesses who have been catering lunches for you sorry we're not paying you it allows you to go to the workers and say sorry we're not paying you the hearing will come to order Barney Frank is a no-nonsense chairman who brought the heads of the big three auto companies before his committee and let anyone who wanted to vent my fear is that you're going to take this money and continue the same stupid decisions you've made for 25 years but there was never any doubt that Frank himself didn't want the car companies to go under what about the the idea that in capitalism if a company doesn't cut it Darwin said yes it's true and Darwin was a very good biologist I don't think he was much of an economist what we're now faced is with all the taxpayers having to prop up companies that made terrible decisions consistently no we're not popping up companies that your mistake we're popping up individuals the world I think it's just of companies the world are people the country is people and yes it is possible to argue that the government about welfare yeah I'm for welfare you're not are you for letting people starve at a meeting on Tuesday Frank listened to mayors of towns hit hard by car factory layoffs you know there's a theory out there that you the congressman had this public spanking of these guys in order to cover yourselves that's the kind of about people who do not have any idea what they're talking about like to make uh that simply isn't me I don't know what I'm talking about by making that argument yes ouch this could explain President Bush's nickname for him saber tooth there are many ways to describe Barney Frank I wanted to read you a sampling of descriptions of you they almost they're kind of come in couplets we have impatient and anti-social sharp tongued and downright mean I mean he thought so there's no question about it I think that I love this job but the biggest problem is there are thousands of people in Washington who earned a living by trying to waste my time they repeat themselves they ask you stupid questions and he can be sharp tongued a master of the put down and a master of the dress down water regular order I asked the gentleman be seated when we sat down I escaped neither put down television is apparently the enemy of nuance but Nuance is essential for thoughtful discussion no our dress down let me start with that second despicable comment you just made and I am surprised at you that you would do something like that whack it's no wonder that when Sabretooth the liberal took over the committee that oversees banking Wall Street shuttered but two years later even the most hardened Republicans give him good reviews I'm very proud of the fact I think we've shown with the last two years and we will show going forward that you can be a liberal Democrat and cooperate in creating the kind of climate that's good for business as well as for everybody else you're pro-business oh absolutely listen to what the financial Community says here's Henry Paulson on Barney Frank he's a market Savvy pragmatist who looks for areas of agreement because he wants to get things done here's a guy from JP Morgan Chase he said he hasn't veered off into Crazy Land meaning liberalism I've heard someone describe you this way you're liberal on social issues you're a pragmatist on economic issues so I reject the notion that there was you're talking about two different things that's like saying are you more of a cooker are you left-handed what I'm rejecting is this liberal here fragment is there that's like comparing Tuesday night okay as as a liberal I am already obligated to be pragmatic what good do I do poor people elderly people people who are being discriminated against because of their sexual orientation if I'm not realistic about accomplishing something and he does accomplish this week he shuttled from a hearing on the bank rescue package I did vote for this to negotiating and strategizing on the car loans to briefing Tim Geithner Obama's choice for treasury secretary he was so busy he didn't have time to tie his shoes it's been like this ever since the credit crisis hit and he worked hand in glove with treasury secretary Paulson to write the rescue plan for the banks then he pressed and prodded his colleagues in Congress to get it passed all of us had to put up with this terrible financial problem they had to put up with the financial problem and me the relationship between Frank and Paulson has soured lately since Paulson hasn't spent any of the rescue money to help struggling homeowners the second person is refusing to use the money that Congress voted to reduce foreclosures the bill says he's supposed to um he won't do that okay wait wait I have to stop you right there yeah you wrote the Bill you are the quote smartest man in Congress how did it happen that you wrote a bill that the Secretary of the Treasury has the power not to fulfill in the way you wanted it fulfilled because there's a metaphor that works here you cannot push on a string there is no constitutional way to force them to do things but didn't you write the bill in a way that allows him to do this and you could have written it differently no there's no way you can force people to do things but there are those who argue that reducing foreclosures would reward and encourage delinquencies you have the guys working three jobs so he can pay off his mortgage you have a guy who's delinquent he gets help this other guy doesn't get help so isn't there an unfairness and why shouldn't the guy over here let me give you another one of his mortgage why doesn't he deliberately well what about some let me give you another one finish I want to see what you think about this what about someone what about someone who's been working hard 40 hours a week maybe with some overtime and going to work every day and then his neighbor loses his job the neighbor starts getting unemployment insurance the neighbor who lost his job is getting money for nothing from from the government there's some unfairness there I'll be meeting with Fannie Mae and Freddie Mac on Friday because of his Support over the years of affordable housing for the poor conservatives actually blame him for the whole subprime mortgage mess saying he enabled Fannie Mae and Freddie Mac to back riskier and riskier Loans here's Bill O'Reilly you're the brilliant guy who presided over the biggest Financial collapse in federal oh no no come on you coward say the truth coward it isn't every day you see a congressional committee chairman mud wrestle the problem was that we passed in 1994 in fact the bill now we're back to 1994. this is why Americans don't trust the government no this is boy your stupidity gets in the way of rational discussion Frank has been a target of criticism for years and not just because he's a liberal I'm gay I'm left-handed I'm Jewish there's a lot of things that I'm supposed to do that I don't do how you doing one thing he does do is get re-elected over and over as an openly gay man though his district is in Massachusetts you'll walk three steps and wave to the left you walk three steps and wait for the right we caught up with him in Fall River this isn't one of the congressman's constituents he's Barney Frank's boyfriend Jim Reddy it must have been really hard for a gay kid in high school in the 50s well it was hard internally it was not externally because I just never told anybody it was gay I mean not anybody not a single human being he grew up in Blue Collar Bayonne New Jersey a Jewish kid and a predominantly Catholic Community who was gay did you know it was quite young I realized it when I was 13. and it was very depressing very sad and I was frightened about it I just figured okay I will profess it which he did till his twenties but he still kept it secret as he got into politics first in the Massachusetts legislature then as an up-and-coming Congressman but by 1986 enough people knew that he felt compelled to tell Speaker of the House Tip O'Neill I said I just wanted to alert you that be some stuff coming out about my being gay he said oh Bonnie don't be listening to that crap they say all that stuff but always I said well tip of the point here is that it's true and he sort of slumped he said oh Fanny I'm so sad I thought you might be the first Jewish speaker a serious reaction but soon after Frank decided to take a step no one in Congress had taken to out himself when the Boston Globe sent its reporter kaylon cope Frank tried to make it no big deal and Kay came and sat down and put a tape recorder in front of me and said are you gay and I gave what was a very considered answer yes or what because yeah and that was it yeah I wanted to be kind of book but kill your career I thought about the house leadership uh it became clear to me if I came out I would never be in the house of leadership and that's certainly the case because I couldn't expect members from all over the country to then be voting for me and defending that in their own districts on the other hand it is not in any way diminished my influence as a committee chairman the lowest point of his life he says came two years later when he found himself in a sex scandal a male hooker Frank had hired told reporters that he had run a prostitution ring out of the congressman's apartment an investigation concluded that Frank didn't know anything about it but he was reprimanded and went to the floor of the house to apologize there was in my life a central element of dishonesty and then he went back to work this man who composes Letters by dictaphone not email and doesn't use a computer delved into the intricacies of modern banking becoming the authority on all things Wall Street where are you putting your money well actually um I can say because it's a matter of public record Massachusetts municipal bonds um you're out of the stock market he said he's pretty confident the crisis will end in about a year so you think we're going to be past all this by the end of oh no I think by the end of 09 or 2010 we will be part of the problem right now he says is that secretary Paulson gave the rescue money to Banks but he's not leaning on them to lend it so in other words the treasury Department is not going to hold their feet to the fire to lend this money not only right not only I can hold their pizza but they are telling them that the fire's out so so what are you really saying about Paulson I am very disappointed in this I I first I thought he was focused too much on the financial communities tender feelings now I think he's focusing almost exclusively on them true to form he's an equal opportunity curmudgeon also criticizing Barack Obama for not being assertive enough on the credit crisis part of the problem now is that this presidential transition has come at the very worst possible time we saw it coming I don't know if there was any way to avoid it Senator Obama said we only have one president at a time well that overstates the number of presidents we have at this time we don't appear to have any but we do have Barney Frank we wondered what he thinks of the job he's done the problem in politics is this you don't get any credit for disaster averted going to the voters in the same point things really suck but you know what if it wasn't for me they would suck worse that is not a platform in which anybody has ever gotten elected in the history of the world

The Mortgage Meltdown

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when it comes to bailouts of American business Barney Frank and the Congress may be just getting started nearly two trillion tax dollars have been shoveled into the hole that Wall Street dug and people wonder where's the bottom it turns out the abyss is deeper than most people think because there is a second mortgage shock heading for the economy in the executive suites of Wall Street in Washington you're beginning to hear alarm about a new wave of mortgages with strange names that are about to become all too familiar if you thought subprimes were insanely reckless wait'll you hear what's coming what's the future hold well this show one of the best guides to the danger ahead is Whitney Tilson he's an investment fund manager who's made such a name for himself recently that these investors who manage about ten billion dollars gathered to hear him last week Tilson saw a year ago that subprime mortgages were just the start we had the greatest asset bubble in history and now that bubble is bursting the single biggest piece of the bubble is the u.s. mortgage market and we're probably about halfway through the unwinding and bursting of that bubble halfway it may seem like all the carnage out there we must be almost finished but there's still a lot of pain to come in terms of right downs and losses that have yet to be recognized in 2007 Tilson teamed up with amherst securities an investment firm that specializes in mortgages Amherst had done some financial detective work analyzing the millions of mortgages that were bundled into those mortgage-backed securities that Wall Street was peddling it found that the subprime loans to the least creditworthy borrowers were defaulting but Amherst also ran the numbers on what were supposed to be higher quality mortgages and they were frankly terrifying as data we've never seen before and that's what made us realize holy cow things are going to be much worse than anyone anticipates the trouble now is that the insanity didn't end with the subprimes there were two other kinds of exotic mortgages that became popular called all day and option arms the option arms in particular lured borrowers in with ultra-low initial interest rates called teaser rates sometimes as low as 1% but after 2 3 or 5 years those rates reset they went up and so did the monthly payment so a mortgage of say $800 a month could easily jump to $1,500 now the altai and option arm loans made back in the heyday are starting to reset causing the mortgage payments to go up and homeowners to default the defaults right now are incredibly high at unprecedented levels and there's no evidence that the default rate is tapering off those defaults almost inevitably are leading to foreclosures and homes being auctioned and home prices continuing to fall what you seem to be saying is that there is a very predictable time bomb effect here exactly I mean you can look back at what was written in a 5 and a 7 you can look at the reset dates you can look at the current default rates and it's really very clear and predictable what's going to happen here just look at this projection from the investment bank of Credit Suisse these are the billions of dollars in subprime mortgages that reset last year and this year now look at what hasn't hit yet the altai and option arm resets when homeowners will pay higher interest rates in the next three years we're at the beginning of a second wave how big is the potential damage from the old days compared to what we just saw in the subprimes well the subprime was approaching a trillion the altai is about a trillion and then you have option arms on top of that that's probably another five to six hundred billion on top of that how many of these option arms would you imagine are going to fail well north of 50% my gut would be 70% of these option arms will default how do you know that we know it based on current default rates and this is before the reset so people are defaulting even on the the little three percent teaser interest only rates they're being asked to pay today that second wave is coming ashore at a place you might call the repo riviera miami-dade County Oscar muñoz used to sell real estate now his company clears out foreclosed homes business is just going through the roof for us fortunately for us unfortunately for the poor families who are going through this I wonder do you ever come to houses where the people are still here absolutely that's really a sad situation I'd rather not meet the people why not it's not easy to to come in and move a family out it's it's just our job to do it for the bank it's it's just the nature of what's going on in the market right now what is going on in the market right now how much working are you getting every day we have 20 30 assignments a day a day just you're come I just our company and we're one of the few companies right now who are hiring we hire we have to hire people because the demand is is so high people who've been evicted tend to leave stuff behind the next house is usually much smaller banks hire munos to move the possessions out where by law they remain for 24 hours often the neighbors pictures or remains once the homes are empty the hard part starts trying to find buyers in a free fall market miami real estate broker peter Zalewski talks like a man with a lot of real estate to move we have a hundred and ten thousand properties for sale in South Florida today 55,000 foreclosures 19,000 bank owned properties sixty-eight percent of the available inventories and some form of distress they need someone to clean it up what's the name of your company it's called condo vultures Realty what does that mean that in times of distress and times of downturn there's opportunity and you know vultures are clean up the mess a lot of people seem to think they kill but they don't actually kill they clean the killing in Miami was done by the developers back when it seemed that the party would never end they sold hyper-inflated condos at what amounted to real estate orgies sales parties for invited guests who were armed with option arm and all teh loans there were red ropes out outside they had hired cameramen and they had hired photographers to almost set the scene of a paparazzi they were hiring fake paparazzi to make the customers feel like they were special you were selling a lifestyle what role did these exotic mortgages play these all days and the option arm they were essential they were necessary without the altai or option our mortgage this boom never would have occurred it never would have occurred because without the altes and the option arms many buyers never would have qualified for a loan the banks and the brokers were getting their money up front in thieves so the more they wrote the more they made they stopped checking whether the income was even real they turned to low and no dock loans so called Liars loans and jokingly referred to as ninja loans no income no job no assets and they were still willing to lend but help me out here how does that make sense for the lender it would seem to be reckless in the extreme it was but the key assumption underlying the willingness to do this was that home prices would keep going up forever and in fact home prices nationwide had never declined since the Great Depression on the way up everyone wanted in no one expected to feel any pain people like acupuncturist Rula geosman became real estate speculators how many properties did you buy in this last five-year period I believe in the last five year period I bought about six properties and what did you buy them for for investments she says she put 20% down on each now they're all financed with option arm loans what did you understand about the loans well unfortunately and ask too many questions I mean in the old days I would shop around but because of the frenzy and I was so busy looking to buy other properties I didn't really focus on shopping around for mortgage brokers but if you're investing in real estate you're buying multiple properties you should be asking a lot of questions yeah why didn't chance I was busy I was really busy looking at property all the time all day long did you read the paperwork I know I didn't now she's losing money on every property you know that there are people watching this interview who are saying you know she was just foolish she was greedy and foolish she was buying small apartment buildings and wasn't paying enough attention to how they were finance my full-time job is on mine acupuncturist so this was just a side thing you're an acupuncturist but you got stuck in real estate yeah geo stmas says she was misled and she hopes to renegotiate her loans but many other buyers have simply walked away from their properties this Miami luxury building was a sellout but when we visited a quarter of the condos were in foreclosure what did this place go for this was originally purchased in October of 2006 for 2.4 million dollars 2.4 million what's it worth now the asking price from the lender is 939 so lost a million and a half dollars in value couple years it's a tough two years and there are tough years to come because just like the subprimes the altai and option our mortgages were bundled into Wall Street securities and sold to investors in a nutshell 2009 looks like what to you miserable 2010 Mets have been even worse Shaun Egan runs a credit rating firm that analyzes corporate debt Fortune magazine cited Egan as one of six Wall Street pros who predicted the fall of the financial Giants this next wave of defaults which everyone agrees is inevitably going to happen how central is that - what happens to the rest of the economy its core its core because housing is such an important part we're not going to get the housing industry back on track until we clear out this garbage that's in there that hasn't cleared out yet in fact we haven't seen the bottom it's getting worse what do you need there are some statistics from the National Association of Realtors and they track the discipline 'it's on the market and that's grown from 2.2 million units about three years ago up to 4.5 million units earlier this year so you have you have the massive supply out there of units that need to be sold what with the housing supply increasing that much what does it mean it means that this problem the economic difficulties are not going to be resolved in a short period of time it's not going to take six months it's not going to take 12 months we're looking at probably about three four or five years before this overhang the supply overhang is worked through in the next four years eight million American families are expected to lose their homes but even after the residential meltdown Whitney Tilson says blows to the financial system will keep coming the same craziness that occurred in the mortgage market occurred in the commercial real estate markets and that's taking a little longer to show but but they're going to be big losses there are credit cards auto loans you name it so we're maybe halfway through the mortgage bubble but we may only be in the third inning of the overall bursting of this asset bubble does that mean that the stock market is going to continue plunging as we've seen the last several months actually we're the most bullish we've been in ten years of managing money and the reason is is because the stock market for the first time I can say this in years has finally figured out how bad things are going to be in the stock market is forward-looking and with US stocks down nearly fifty percent from their highs we're actually finding bargains galore we think corporate America is on sale the stock market will still have a lot of figuring to do with more troubling news on the horizon the Mortgage Bankers Association says one out of ten Americans is now behind on their mortgage that's the most since they started keeping records in 1979

Wall Street Blows Off Steam

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the opening bell signals turmoil and uncertainty on Wall Street these days and stress at least is hitting all-time Highs but not far from the trading floor the sound of another Bell is providing some relief for that stress for anyone who's in Wall Street or anyone who has a high stress job boxing is a great Outlet at Trinity boxing where more than half the clientel comes from Wall Street the manager agrees the boxing we teaching people really helps them to deal with that mental aspects and the and the physical aspects of stress Corporate Finance attorney Cecilia Aza says boxing has also made her better at her day job I think you have to be quick on your feet you have to be able to respond to whatever's coming at you and if there punches flying at your head in your face you're not really thinking about what's going on um in the market the boxing ring and the trading floor are a lot alike there are plenty of Hard Knocks but in these tough Economic Times many on Wall Street are finding some comfort here definitely hitting the bag is it's a great stress reliever but sometimes when life shakes you up throwing a punch isn't good enough you may have to learn to make the punch I want you to make me a Dairy and a slowen Fizz instructor Howard lamford is teaching his students the bartending trade you got almost 3 ounces of liquor that you just poured in my glass you see if a manager saw that that's a loss of a job I'm here because right now the economy is in a very challenging place so I've decided that a really good way to make income in the interim is to become a bartender Wharton graduate Katherine Lucas quit her job in real estate last year to finish writing a book that was before the economy went on a vendor I need to make my ends many Catherine is not the only one who thinks tending bar makes Financial sense since the economic downturn we've seen uh an influx of more people uh We've spiked maybe 40% higher than in past years I realize that I need to hunker down this might be something I'm going to be doing for a good year plus so what are we going to do with our light rum maybe the real lesson here is when life leaves you shaken it may be time to mix it up a bit Alexis christopherus CBS News New York