Okay...whatever you say comanche: http://tinyurl.com/2dvccu This isn't a minor setback...that seems to be your perspective. If I'm incorrect, sorry. But this is an issue that could really harm many more in its wake. The RE boom has been largely cited as a large reason for the economic upturn we've had the last few years, hence the growth in that industry. You know how many people's jobs will disappear just because these companies are no longer writing subprime loans and Alt-A loans...50% of loans last year were Alt-A....that's a large percentage of the loans being cut off and the people involved with those processes aren't going to be suddenly finding work in other great sectors! The housing market was far far overblown and it was the tech bubble in another sector and on another day...but this is much bigger. There are a lot more people involved, a lot more repercussions, and a lot longer of a lasting effect. http://www.billcara.com/CS Mar 12 2007 Mortgage and Housing.pdf Check out that report...it breaks open the issues quite nicely. So you think the prices today reflect the "slowdown" right? Man, you must be right, those geniuses had NEW and LEND pegged with their valuations! They were spot on. Of course a few had it right...there are always the few who have it right. But the masses happily ignore the issues. Alt-A loans are going to cause a lot more pain because Alt-A loans resetting means loans resetting on more middle class people with more to lose than subprimes did. Up to 25% of Alt-A loans were sold to speculators last year...that's not a small number...speculators with exotic loans that reset to higher rates or that refinance debt from a negative amortizing loans are going to get slaughtered, or they can just walk away...I'm guessing they walk...at risk to their credit and just stick the lenders and loan holders with a bunch of overpriced housing in Bakersfield and Cape Coral. I don't disagree with you that last year a lot of adjustments were made...you're very right about that. But I think what we saw last year was due to a bit of slowdown...these loan problems are going to be a bigger problem than a natural slowdown. I think lenders squeezed the market and are going to get hit back with some major problems.
I'm still waiting on you to share statistics or any insight...not just random 2 sentence answers. Thanks in advance for the 10th time.
Nice post. The housing effect will return as a negative news item in the future. Just not today.... It's funny. 99% of "traders" eshew trend following yet they're still shocked when prices fill in and chop.
Spillover? http://blogs.wsj.com/marketbeat/2007/03/22/signs-of-subprime-spillover/ You can see the sad irony in this guy's story.
found this: amazed it didn't make headlines Many people with 401K or pension funds may not even realize that they are exposed. For example, the New York State Teachers Retirement System has a $91.5 billion investment in the sub-prime mortgage lender New Century Financial. And many, many funds are invested in the mortgage-backed securities market.
I don't need to. I'll let the market decide. So far, the market has rallied for the past 2 years despite a so called housing bubble.
NFI, MFA and HMB made their highs 3 years ago. By Spring 05 it was clear prices in SoFla and SoCal were stalling. Many lenders topped in advance of housings top. All I'm saying is, it's old news.
Uh...how is this old news? Timebomb loans that are going to be going off over the next 1-2 years? That's old news? Why is it that NEW and LEND just hit bottom? http://finance.yahoo.com/charts#cha...line;crosshair=on;logscale=on;source=realtime And that doesn't look so old to me...come again.
Did you read that Credit Suisse article? Or is that old news? http://www.billcara.com/CS Mar 12 2007 Mortgage and Housing.pdf
Of course it's old. Just by virtue of you or I knowing the news means it's old. If you think there's an edge in making market responses to stuff in the public domain then go for it. I choose to stop making the same mistakes....well after a thousand times or so. Not to sound like Gordon Gekko but "tell me something I don't know." I got pasted several years ago being short futures when Freddie Mae or Fannie Mac or who ever that crossgender lender is was having problems. I was probably the last guy in America to notice. I'm not into thinking. Neither markets nor I are rational. My best trades have been catching markets that are moving for no apparent reason. Bulls climb a wall of worry. Not the type of fundamental information that drives buyers. I suggest you spend more time reading the tape and less time reading the news.