Skip to comments.An Economic Pillar on the Verge of Collapse
Posted on 12/07/2006 8:52:46 AM PST by GodGunsGuts
An Economic Pillar on the Verge of Collapse
By Steven Pearlstein Wednesday, December 6, 2006; D01
It's been more than a year since we've heard from those who denied there was a housing bubble.
Since then, the industry boosters, along with the "soft-landing" crowd over at the Federal Reserve, have coalesced around the idea that maybe the market got a bit frothy after all, but now the correction is almost complete, the unsold inventory's been worked off and the worst is behind us.
But just when you're feeling hopeful again, you get reports like yesterday's Wall Street Journal piece reporting that delinquency rates are suddenly soaring on all those loosey-goosey subprime mortgages. They are starting to cause real heartburn for pension funds and other investors who bought securities backed by those mortgages on the theory that they were no more risky than a Treasury bond.
"We are a bit surprised by how fast this has unraveled," Thomas Zimmerman, head of asset-backed securities research at UBS, told the Journal, removing his head from the sand. Trust me, Tom, you ain't seen nothin' yet. After the subprime loans come the 100 percent, interest-only loans, followed by the meltdown in the overbuilt multi-family housing sector....
(Excerpt) Read more at washingtonpost.com ...
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus
A market correction portrayed as a doomsday scenario.........
Ping...nod to Ex-Tex for turning me on to this article--GGG
The only slowdown in construction is because of the winter weather. That should help deplete the inventory even more.
Actually, I am ready for a little break. Been working pretty much 6 days a week since summer because of the demand.
For those who fell for ARM Mortgage deals that were too good to be true.... they always are...... when Americans are ignorant, stupid and dumb and get in over their heads it is someone else's fault.......
You guys are reading this all wrong --this is excellent news. The economic forecasts have just been upgraded from "worst economy since Hoover" to "on the verge of collapse".
Up here in the Northeast, the "housing slump" is already over. People looked around, noticed the sky wasn't falling, and jumped back in with both feet. I am busy, believe me. I wouldn't have minded a little Christmas vacation this year, but oh well.
I'm not real sure that's an upgrade. Sounds like a downgrade.......
How fast that gap unwinds may determine whether the landing is soft or hard.
The first hit is free. But now you're a gloom junkie.
You got it.
With fixed rates at all-time lows, taking out an adjustable-rate loan is so stupid as to defy comprehension. Seriously, it is staggering. Plus, a lot of them have pre-payment penalties! All you can do is shake your head and mutter, "Financial Darwin alert."
"The first hit is free. But now you're a gloom junkie."
All markets change over time. If your situation is tolerable as is and the market makes you nervous, stay out.
people who think real estate always appreciates are leaving out the last part of the sentence, "...if you wait long enough."
Very well said ... and the gov't must step in and do something!
Just once I'd like to those who get into finacial trouble have to get themselves out. Bailing out the ignorant is one way to make sure they stay ignorant.
Told my dad I wanted to learn how to swim, so he thru me in the deep end of the pool. Guess what? I learned how to swim.
Maybe you're right, going from collapse to verge-of-collapse is a step backwards I suppose.