This blog has failed to pay enough attention to the ongoing subprime mortgage meltdown. The subprime mortgage meltdown is a big event in the ongoing housing market decline. Other bloggers / websites are doing a fantastic job covering the mortgage meltdown.
P.S. David Lereah Calls The Bottom for At Least The Fourth Time
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Did you see the article on Calculated risk showing the PRIME ARM market spike in foreclosures.
ReplyDeleteThis isn't just sub-prime. Oh, that always goes first. But the prime market is going to tank too.
Its too late to do anything. Businesses will leave bubble markets as they have no choice but to follow employees. Profits simply are not high enough to justify a big pay increase.
The foreclosure rates in almost all of the bubble markets, like DC, are looking to be Double February. This is speeding up.
Got popcorn?
Neil
Hmmm...what to do next...
ReplyDelete'Irrationally exuberant' RE, mortgage agents can look to push tech stocks...or are we back to junk bonds (I get so confused over the bubble order).
Or the Dutch may need some brokers for their mighty fine tulips.
Anybody who might have glanced at the NYT article on 4/11/04 ("Blue Skies and Green Yards Lost to Red Ink"), sensed this was coming...
ReplyDeleteCase study of racketeering in the Poconos, involving developers, brokers, appraisers, tradespeople, lawyers, and "judges with too many conflicts" to dispense justice to defrauded homebuyers. The State A/G had to step in, too little too late.
Noted the founder of the Penn. Homeowners Defense Association, "It's like the Wild West out here...no one is being held accountable."
Final section asks, "A Chance for more Poconos?" Amen.
What an _ _ _ _ _ _ _ _ _ _ _ _!
ReplyDeleteU have 0 credibility with me lacky!
Neil said:
ReplyDelete"Businesses will leave bubble markets as they have no choice but to follow employees."
Neil, do you really believe this? Ive usually found this to be the other way around. Now, do low margin businesses move to lower cost areas to lower their overall costs? Of course. But it's not specifically to "follow employees" ... nor is it "primo" businesses doing the moving. THEY just pass on the higher costs of doing business (including higher salaries) to their customers. I'd be very concerned about working for a business looking to move me to Peoria to cut on costs ...
In all seriousness ... You seem like a very intelligent person. Can't you do better than that company you are working for? Can't you find a company ready to pay you a living wage in a livable place ... rather than wanting to move you? Seriously ...
A soothing tale for the BHs ... Perhaps it'll help them understand how the stock market came to "plunge" a couple days ago ... and why it is now on its way back to normal. (And for the poster who was asking me how it is that I could believe that BHs are part of the herd mentality, I hope this tale will provide the answer.)
ReplyDeletewww.geocities.com/mjloundy
Great observation Lance! I remember folks were making the same statements about stock market in mid-2000. I trusted my 70+ years old advisor instead... Boy, he was right...
ReplyDeleteLance said...
ReplyDelete“A soothing tale for the BHs ... Perhaps it'll help them understand how the stock market came to "plunge" a couple days ago ... and why it is now on its way back to normal. (And for the poster who was asking me how it is that I could believe that BHs are part of the herd mentality, I hope this tale will provide the answer.)
www.geocities.com/mjloundy”
Thanks for the link “Lance”. I’m glad that you’re at least trying to find hard data to support your position:
-Chicken Little
Narrated especially for Harris, by his Dad
(who would rather be there in person) Click on the chick
One day Chicken Little was walking in the woods when -- KERPLUNK -- an acorn fell on her head
"Oh my goodness!" said Chicken Little. "The sky is falling! I must go and tell the king."-
Humm,
So, I guess the you’re trying to say that the 2.2 million sub prime borrowers likely to face foreclosure, YOY price declines, tightening lending standards, lenders folding, foreclosures still on the rise, are all untrue? A fairy tale?
Pick any headline from:
http://www.housebubble.com/newspage.pl
And/or compare the MRIS data from your area:
http://www.mris.com/reports/stats/index.cfm
And explain how these things correlate with the data you have provided.
I'd be very concerned about working for a business looking to move me to Peoria to cut on costs ...
ReplyDeleteSo Lance, please explain this statement to me from a previous blog:
Do you think the first European immigrants to the Americas came because they were attracted by the wilderness and the natives already here? No, they left because they'd been effectively "priced out" of their European homelands
I don't have your infinite knowledge. So please educate me. Did people come here because there were good industries already present in the United States or because they were priced out?
Should I move to a different country now that I am priced out or should I not work for the current company that I work for. I am really confused, and I would LOVE it if you could tell me what to do.
The amazing thing for me is how suddenly the bubble story has started appearing in the media. The Washington Compost had a big article yesterday laying out the whole bubble argument in terrific detail. I have seen mainstream financial websites with headlines like "your house can fall beyond your fears." It's incredible.
ReplyDeleteA lot of homebuyers from the last 2-3 years must be feeling very nervous reading those headlines right now.
A Redskins fan
anon asked:
ReplyDelete"Should I move to a different country now that I am priced out or should I not work for the current company that I work for. I am really confused, and I would LOVE it if you could tell me what to do."
Improve your comprehension skills for starters. The quote you present show you don't understand what was discussed. Hint: the really smart ones managed to make living wages where they were at and didn't get priced out.
Redskins said:
ReplyDelete"The Washington Compost had a big article yesterday laying out the whole bubble argument in terrific detail."
It's like David always said, by the time a story appears in the MSM (mainstream media) it is old new. Redskins, you need to concede ... it's over. The BH claim that subprimes will cause the so-called bubble to burst has been debunked. Your theory had its day in the sun and got proven wrong when the big investment banks pulled the facts out of their back pockets and laid to rest the BHs' claim ... Unless you have a new theory to propose, I don't see how discussing a dismissed and debunked theory is useful. It's time to admit you were wrong.
Lance said...
ReplyDelete“Your theory had its day in the sun and got proven wrong when the big investment banks pulled the facts out of their back pockets and laid to rest the BHs' claim ...”
By Ben White in New York
Updated: 1:12 a.m. ET March 3, 2007
Investment banks plunge on investor fears
This week's market rout and growing problems in the subprime lending market have driven shares in Wall Street's largest investment banks to their biggest losses in a year.
The sell-off has spread from groups more reliant on capital markets trading, such as Goldman Sachs and Lehman Brothers, to those with more retail businesses, such as Morgan Stanley and Merrill Lynch. It has also driven credit default swaps tied to the bonds of several investment banks to just above junk status.
ARM reset schedule from Credit Suisse(as of January 2007):
ReplyDeletehttp://www.irvinehousingblog.com/wp-content/uploads/2007/03/reset.PNG
Ben Stein comments on this topic in his Yahoo! Finance column:
ReplyDelete"Barely Blip-worthy
Today, the reason is supposedly terror in the subprime mortgage market. To put this as frankly as possible, this is just nonsense.
Even if subprime delinquencies and defaults are up, they're a tiny portion of total mortgages. Suppose 13 percent of subprime mortgages are in default. Subprime itself is less than 15 percent of total mortgage debt, so that means that roughly 2 percent of mortgage debt is delinquent or in default.
Yes, that's more than it used to be, and is a disaster for the subprime mortgage companies.
But when a mortgage defaults, the lender takes back the house or condo, sells it, and usually recovers about 75 percent of the loan value or more. That means the real loss would be about 25 percent of 2 percent, or 1/2 of 1 percent.
In the context of a market as huge as the nation's mortgage market, that's not a lot. A few companies will go bankrupt, and someone will make a killing buying their bonds and portfolios at a huge discount as they turn out to be worth a lot more than people thought in March 2007. But it won't mean a lot to a roughly $14 trillion economy, of which the subprime mortgage market is a tiny blip."
http://finance.yahoo.com/expert/article/yourlife/26744