Posted on 01/22/2008 5:39:29 AM PST by lasereye
The fear is spreading.
For months now, investors have been lured to overseas markets with the promise that surging growth and solid economic fundamentals in Asia and the Middle East would insulate them from the credit squeeze plaguing the United States market.
But the broad international sell-off on Monday — and the prospect of a steep market decline in the United States on Tuesday — raised fresh concerns that a looming recession and the fallout from subprime mortgages could have global repercussions.
Some analysts saw the sell-off, with leading indexes off 4 percent to 7 percent worldwide, as being driven by fear more than by fact.
“I don’t think it’s warranted by the fundamentals,” said Edward Yardeni, an independent strategist. “The resilience of the global economy in the face of a credit crunch has been impressive.”
(Excerpt) Read more at nytimes.com ...
And by the armchair economists right here on FR.
If there is a silver lining, it’s that the United States remains the engine of the global economy.
If you have nerves of steel, you could be buying instead of selling here. But only use money you don’t need any time soon.
When did real estate (which is supposedly the basis for mortgage-backed securities) become “valueless”? Something doesn’t make sense here. Could part of the fear be that the Government will prevent banks from foreclosing on people who can’t pay their mortgages?
The best time to buy is when things start going up again. You may miss a few dollars profit, but avoid a lot of pain.
It’s not that it’s valueless; it’s that you can’t sell it without a loss, generally.
This is, indeed, a buying opportunity for those with nerve and some free cash. Look for solid dividend payers that are good defensive plays (eg, Altria, Dupont, Coca Cola, GE, McDonalds, and so forth) that provide 3-4% returns on top of growth.
They have to foreclose and put it up for auction when the buyer defaults. A family on our street sold their prior house for something like $280,000 a couple of years ago. They found out it was foreclosed on and sold at auction for $40,000 IIRC.
“Some analysts saw the sell-off, with leading indexes off 4 percent to 7 percent worldwide, as being driven by fear more than by fact. “
That and the Drive Byes want to help anyway they can to get a Rat elected in Novemeber and they have history on their side at telling the lie and making it fact when it comes to lying about the economy.
Remember the worst economy in 50 years in 1992?
Great advice. My drips in many of these are getting loaded up with more $$
When cash is king!
Around NW Montana there a glut of McMansions in the $400,000 plus range. They are not moving.
Any decent houses under $200,000 are snapped up very, very quickly. We, payed $135,000 for our house 4 years ago. Recently it was suggested that I put a $199,000 sticker on it. It would sell right away, but then I’d have to search out one of those very rare house in the $200,000 to $250,000 range. Anyway I like my little house!
In a nutshell; the truth of it ““What you see is not a panic of the public. This is a panic of the sophisticated,” said James Sinclair, a well-known gold trader who oversees a financial Web site and who has warned investors for years about the dangers of derivatives. “But this will have a tremendous impact on the public. In the end, this will hit Joe Sixpack. It’s very serious, and drastic emergency economic action is needed.””
By the way, remember all those stories about when the stock market crashed in 1929 we didn't get the price back until the early 1950's? People conveniently forget that World War II severely affected stock trading, and if World War II had never happened I personally think the stock market would have recovered back to the pre-crash levels by the middle 1940's at latest.
You’ll hear a lot of this today, “it’s fear-based, not fact-based”. Nope. The facts of the matter have been well-known for years. I’m only surprised it took this long.
Maybe this guy from the NY Times, and the guy from Blackstone on CNBC this morning, who also sang the “fear not facts” song, can explain why triple-A rated bond-insurer MBIA had to ask for 14% when it issued its own loans two weeks ago. And why those bonds have already lost 30% of their face value.
I’m pretty sure MBIA is not triple-A rated.
ditto.
The question of title ownership on mortgage investment packages is somewhat unsettled. Even for the banks holding title it’s worthless to them unless they can sell the property or get someone to rent. Property is debt until settled and they still have to pay property taxes and upkeep so it’s a long-term draw on bank assets. Property taxes is the ugly underbelly of property. The banks know this and want convertible debt. That’s difficult now so they’re stuck holding the property debt bag.
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