twaddle
Thinks s/he gets paid by the post
- Joined
- Jun 16, 2006
- Messages
- 1,703
Brewer, assume, for a theoretical exercise, that the Alt-A & even prime loans become "unmeetable" for a substantial number of borrowers.
Say maybe 20%.
Would you change your predictions then?
Yes, I mean not being able to afford make the monthly payment.
I think the problem is much more widespread than it appears now.
A year from now I'll have a much more definite opinion.![]()
An interesting blog that deals with the topic is
The Housing Bubble Blog
While about 80% of the posts are feces, there are a few bright, knowledgeable folks that make it a good read.
And yes, these guys are uberbears, at least on housing.
Is it safe to conclude that some columnists are paid to fan the flames of bearish paranoia...?
FT.com / Columnists / GillianTett - Why financiers have missed the new monster
I likewise think the house buyers, to whit, Mr. & Mrs. Yuppie, are in for a tiny bit of disappointment. This brings a bit of brightness into this observer's otherwise dull existence.
B the U.
Is it safe to conclude that some columnists are paid to fan the flames of bearish paranoia...?
FT.com / Columnists / GillianTett - Why financiers have missed the new monster
Tinfoil hat alert!
The Fed was pretty much explicitly set up to avoid a repeat of the Depression. If we ever got to the point of 20% of prime loans going bad, you would see a huge fleet of Federal Reserve helicopters money-bombing every city in Merkinland.
I think that the PS/Over-Enthusiastic Farm Workers are running around without their ball-gags again.
Brew, I'm with you til #4. I see a long, substantial drop in the high-runup areas.
Houses should not appreciate much faster than inflation. It's finantial insanity to thing that a house should be worth two, three four or more times as many dollars as it was in 2000. Even at zero interest, those owners will need to live another lifetime to break even on a purely numerical basis.
This might effect the larger economic picture.
We are seeing vast developments, some still being constructed, that will never be occupied.
Now if Uncle Ben reves up the choppers, we can monetize our way out.
Inflation. Ya gotta love it, no?
Part of the problem in any discussion of credit markets and banks is the definition of the word "bank". Unfortunately the meaning/application of the word has been hijacked by the mortgage industry (and Wall Street) in an effort to lend some credibility to their horrendously shady practices. Brewer, please correct me if I am wrong, in the context of your initial comments "bank" refers to those institutions that are regulated by their association with the FDIC.
I believe Brewer is correct, your local/regional bank will not suffer significantly due to the excesses in the real estate market. In fact, your local bank may be in a great position to take advantage of the situation.
Excellent primer on loan origination from Tanta today:
Calculated Risk: Mortgage Origination Channels for UberNerds
My "bet" (2% of the ER portfolio) is based on a sector fund selling at a backtested 10-year low.So, your bet is based purely on decreasing interest costs they'd have to pay to depositors if the fed cuts rates?
I hear Bay Area rental properties are a slam-dunk double-digit return!