Posted on 08/09/2007 12:48:38 PM PDT by Leroy S. Mort
Currently there are about 44 million mortgages in the U.S., and less than 14 percent of them are subprime. And only about 13 percent of those are late on payments, with the majority of late payers working through their problems with the banks.
(Excerpt) Read more at foxnews.com ...
“The question is ... can the economy handle a $16 Billion default?”
If it’s a $16B problem then why did the Fed and ECB throw $100B combined at it in one day! Obviously someone’s arithmetic is way off.
It is having an effect because rich individuals who gambled in hedge funds that went bust are screaming to cause panic in the markets in order to pressure the US government to bail them out. I say to the public keep calm because these rich individuals will go bankrupt and other rich individuals who did not play in the hedge funds will buy out their assets. Everything will re-adjust and life will go on. This is the time to put a little into the stock market indice funds a nibble at a time as the market drops to the bottom. Five years from now when the credit bubble resolves itself and disappears into the past, your investments will rebound substantially. The losses by wealthy individuals and investment banks are substantial, but it will not trigger an economic collapse like the one in 1929. When rich people and major institutions make dumb mistakes, they always try to panic the public and pressure the government to bail them out. Keep calm, buy low so you can in the future sell high.
It sounds like you have a bad case of class envy.
“because these rich individuals will go bankrupt and other rich individuals who did not play in the hedge funds will buy out their assets”
Those “rich” people are evil anyway.
“From each according to his ability, to each according to his need”
I say, take their money, houses, cars and give it to the working man.
/sarc
......I think even the Chinese are on vacation in August these days.....
Which could mean the second and third stringers chained to their cibicles got rattled when the first stringers are away.
Always ~ everywhere.
In an enviroment of decreasing home prices, lenders are not going to accept the risk of foreclosures at loss. Since today, lump sums and high credit scores will be mandatory to buy an house.
Subrime loans represent 14% of the mortgage market, with 14% of buyers kicked out, real estate will spiral down,as well as new constructions, with the loss of millions of jobs in all the related sectors. Enough for a recession.
Guess the 'Breck Girl' gave them bad advice.
Yes...we are still in the summer doldrums. There's always some doom-and-gloom story to make the market tank in the summer.
Watch the market rebound to 14000 in Sept.
“This won’t happen as fast as the tech bubble, but its impact will be far far broader.”
From here, and given what is already priced in to the mortgage co’s and home builders, what sectors would be vulnerable as the ripple effect expands?
However, knowing the way the future works, I could have lost 58% just as easily.
We had a group of 'em move in down the street ~ stupid landlord ~ they mistook all the ME types here for Latino I guess ~ surprise.
Anyway, they're complaining already about NO WORK IN THIS AREA ~ on their ever present cellphones they use to scarf up jobs.
In this part of town (Springfield/Annandale/Alexandria) most of the "undocumented tourists" are from Korea and Pakistan, as are the legal immigrants who hire them for major construction work.
They don't hire Latinos unless they are Salvadorans without criminal records anyway.
Just exactly what idiot sent those guys out here to be unemployed!?
Money is going to tighten across the board, affecting liquidity and capital access across the board.
As to the next stocks to watch beyond the immediate mtg, banks and REIT’s and direct real estate stocks... I’d expect to see downturns in the suppliers markets.... basically if they sell the parts to build or maintain homes their stock is going to go down...
Folks don’t go to Home Depot when they rent... they don’t fix up their bathrooms if they can’t make their mtg payments...
Our entire economy is based on real estate in some fashion its intrinsic value is the underpinning of every other industry. IF its value declines and declines rapidly, the ripples will be shockwaves throughout the entire economy.
It is not class envy, hedge funds are played by people with serious money to risk. What galls me is that they know the risk when they put their money in, and when the fund goes bust they are screaming for government bailout and going to court suing the funds. Their complaints would be legit if the funds deliberately did something fraudulent or illegal. Most of the panic you see in the media reports are caused by these rich risk takers who turn out to be sore losers and trying to use their contacts in the media to create panic and ultimately pressure on the government to bail them out.
I saw the same arguments when the Savings and Loans went under due to lack of tight regs and scaming buyout artists who brought the banks and used them to finance their personal pyramid scheme to buy and speculate real estate. There was no bailout, the government set up a special commission to auction off all the S&L assests and holdings and within five years the system recovered. All the panic you see is MSM hype and the rich banks/individuals who lost money in the hedge funds trying to create public hysteria to pressure the government to bail them out. Tightening up the loan requirements will stabilize the real estate market and eliminate the speculating that has distorted the pricing, and fueled the loan scams that the mortgage companies perpetuated on the banking system. Other cash rich institutions and prudent investors not caught up in these scams and games will simply move in and buy up all the assests of the bankrupted ones. Market will correct and move on creating new winners as it buries the losers.
Bear Stearns just had two hedge funds go bankrupt. Where was the bail out? All you talk about is rich people and the bad things they are doing with no proof, just assumptions. That’s why I say you have class envy.
bttt
Let me do the math for you. 13% delinquent of 14% of the mortgage market is LESS than 1% of the TOTAL mortgage market. The subprime market is in serious trouble; the TOTAL mortgage market is not.
Things may well get worse but the evidence is not there yet. Things may well get much better too. Smart money is betting on the latter. Look at the homebuilder stocks today. YMMV.
The real fools are the doomsayers who have no information to back up their “sky is falling” claims. We’re doomed! We’re doomed! Oops forgot CAPS ON. Fools! Fools! Oops, shorts! shorts!
The feds are increasing the money supply and are under pressure to drop the interest rates. Investment bankers are already burning the phone lines screaming at their contacts in Wash DC that the losses are huge and unless the feds provide some relief they will cause more panic by pressing the media and etc. Give it time and you will see the senators/reps representing San Francisco, Chicago and New York City (center of US finances) demand the feds to do something to provide relief.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.