Posted by
DaHKGKid
17 yrs ago
US Home Mortgage Market only Half Way Through!
This new report from 60 minutes says it all. We have seen the pain of Subprime, but the two other vehicles such as Option Arm's worth 1 Trillion and Alt A worth 600M US are coming due in the next 1-3 years.
These are know as Teaser Rates, low 1-3% rates for the first 2-3 years to get qualified buyers into properties. These properties now under water, where for example $800/m initial payments will turn into $1500/m all coming due. 50%-70% of these two vehicles will default.
There is NO BOTTOM in sight!
http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml
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Ed
17 yrs ago
Isn't that special....
Add this second disaster to the defaults that are sure to come with all these job losses we are seeing and that leaves no other conclusion other than that we are still only seeing the beginning of this crisis.
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When 60 minutes gets involved generally it to prepare people for the worst and give them a dose of reality. This will again move out the bottom of wall street and main street to 2010 and 2011-2012.
I still believe the quickest solution to any recoveryin the USA is to find the housing bottom but it is impossible to see it! DEFLATION! Move Bad News! Dow 6500, S&P 600?
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include Madoff scam in the bad news too
HSBC, Europe's biggest bank, joined a list of top names in world finance admitting huge potential losses on Monday in a suspected pyramid fraud scam run by ex-Wall Street heavyweight Bernard Madoff.
"On the basis of information presently available, HSBC is of the view that the potential exposure under these financing transactions is in the region of $1 billion (740 million euros)."
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I agree with most economists that the Madoff losses will fundamentally have little effect on Wall Street but more importantly the fear that comes with it at the worst time. Where can your money be safe today when a 30 year trusted veteran does wrong.
If confidence is lost, there will be limited investing. I fear that even with Quantitative Easing as fears of Deflation rise, the US may not recover for 4-5years, half the time of Japan.
Do we write off 2009 & 2010?
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75% of financial markets people will loss their jobs in next 2 years...the madoff scandal now insures that the pullback will wipe out a big chunk of the hedge fund industry as well. Now that the first round of cosmetic layoffs are done, in a few months in the next round the banks and brokers will be shutting down or selling off whole departments.
Most managers at banks have no real business plan (i have some experience there...) Frat boy type senior mgmt allowed everyone to load up the books with mediocre positions to give the appearance of real business and to inflate everyone's bonuses. Its gone so far the ceos and their accountants can't understand their own exposure.
If the self serving management pay themselves bonuses again to 'retain talent' and retain their perks I think the finance industry is going to face a ten year public backlash and obama will regulate it into something resembling the electric utility sector. I would wager 90% chance on that right now.
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