Posted on 06/26/2007 10:02:06 PM PDT by djf
Pritchard’s wet his pants again?
makes me think of the 1929 margin calls
I had heard about the Bear Stearns stuff... it wasn’t talked about alot, but when it was, there was definitely an underlying current of fear and uncertainty.
Distressing news.
And that it could be big. Much bigger than nominally stated.
I read in another story that there were bids of only 30% of face value on this junk, which is what prompted Merrill to cancel the auction.
whoops never mind
>>Lombard Street’s warning comes as fresh data from the US National Association of Realtors shows that the glut of unsold homes reached a record of 8.9 months supply in May.<<
Right now we need at least 20 million foreign language speaking people who automatically qualify for welfare. I hope the Senate will do the right thing to help these people who have such fine work ethics, family values and no desire to become American citizens.
But they were MORe than happy to book those origination, consultation, and transaction fees, weren’t they?
Is this whole mess part of the derivatives market?
People have been predicting a collapse of the hedge funds stuff for a while, they’re just way, way too dam leveraged.
I admit I’m a little confused. Does it refer to people who will default on a loan and not pay, or is it a poorly funded loan?
If it is the former, what exactly is wrong with a little deflation in the housing market. It will allow first time buyers a way in, and in time the market recovers its losses. Housing value goes down, demand goes up, housing value goes up...
We need more of a saving culture and less borrowing.
subprime is the rate you pay if you are percieved not to be a good risk, and is an interest rate that is typically higher than what the average consumer pays.
Well, the Chinese, Japanese, SE Asians, wealthy Latin Americans, etc. provide us with our savings, as long as they keep depositing money and buying our debt...
Also, don't higher interest rates drive down the cost of housing. Perhaps a good thing for some who wish to enter into the market as new home owners.
BTW, thanks for straightening that out for me.
Do one simple thing: make savings and interest-bearing checking accounts up to US$100,000 tax free in terms of interest earned. The savings rate would rocket through the roof if that happens.
Yes.
Not a bad idea. I just don't think the average Joe worries about the tax on his meager savings account.
The problem is, the absolute exorbitant prices that have been paid for what is really not all that great real estate. Someone in California got, for a patch of land and a mobile home, something like 1.7 million dollars a few years ago, and that had purchased it, I think a year before, for $900,000.
It’s a real estate market that is nuts, and inflation that has gone into overdrive. And then people have been taking out even more loans against the property they have, trying to capitalize on equity. It’s all based on money that is not really there, and it is going to come crashing down, and it’s going to be disastrous in some areas, but more than that, the fact that alot of national mortgage companies are leveraged into this insane markets.
It’s a recipe for disaster, and it reflects in general the problem of the 1990’s onward economy. With the exception of a few small recession, we have been on economic full blast since the mid 80s. Because of government controls on the economy, we have eliminated deflation as the corrective measure that it used to be. Well, till now, but it’s only going to be a real estate deflation, which is going to bankrupt alot of people, while other prices keep rising.
The only thing that kept the 70’s from being deflationary were the various government controls we instituted after the New Deal to stop deflation. Problem is, the New Deal was meant to be temporary, it’s now permanent and it is setting up what could possibly be a worse economic collapse then that period. No politician has the courage to tell the average American worker that if they lack a college degree, their income in real value, has probably reached it’s eternal peak, we’re in a world market now. Non-college educated Americans will have to get used to lower wages.
But this is all going to have to happen with us taking a severe economic hit that I don’t think this generation is ready for. One thing the deflation and correction of the thirties did, salaries that no one would take in the 20’s, people were greatful for in the 40s. The correction hurt, but, in the end it made our economy stronger and helped equip us to defeat the Nazis. I think the next decade will prove what the entitlement generation is made of.
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