This is where everyone goes wrong. It wasn’t that everyone had convinced themselves that subprime would be profitable. Subprime WAS massively profitable. There were subsequent losses for those who, unlike Goldman (GS) didn’t jump ship in time. But, make no mistake, plenty of people made bank off subprime.
via Seeking Alpha.
There seems to be a growing consensus that home prices are headed down, not up, in the absence of free money from Uncle Sam, the only important question being the magnitude of the decline. Housing Wire reports on a few of the latest analysts’ estimates including Moody’s where the chart below was offered.
via Seeking Alpha.
America is a “Mickey Mouse economy” that is technically bankrupt, according to Jochen Wermuth, the Chief Investment Officer (CIO) and managing partner at Wermuth Asset Management.
“America today looks like Russia in 1998. Consumers, companies and the government are all highly indebted. America as a result is a bankrupt Mickey Mouse economy,” Wermuth told CNBC.
via CNBC.
Kristopher Gerardi, Christopher Foote, and Paul Willen, of various regional Federal Reserve banks, have a paper which looks at economic research on whether or not there was a housing bubble, and which concludes that “we do not currently have the ability to prevent a bubble from forming or the ability to identify a bubble in real time”. Yes, they admit, some smart and prescient economists did say, with complete accuracy, that there was a bubble. But! Other economists weren’t convinced! So, never mind, there’s nothing we can do.
via Seeking Alpha.
The point is that the banks ARE insolvent and unless American taxpayers collectively (i.e. via the government), take on a load more debt to pay them for their stupidity; at some point someone is going to find out.
Outside of the government handing out $50,000 tax credits there is little anyone can do to reverse the relentless grind of reality.
This is the reality of a bubble:
via Seeking Alpha.
Home Sales Are Now Tanking
Each week, the Mortgage Bankers Association (MBA) releases a “seasonally-adjusted” index of mortgage loan applications. Five weeks after the April 30 expiration of the first-time buyer tax credit, the unadjusted figure for purchase loan applications was down 49%. The figure for the first week in June was 44% lower than the year earlier number. In fact, the unadjusted index has been lower than the year earlier figure throughout 2010. It appears certain that the tax credit has indeed pulled home sales from the future.
via Seeking Alpha.
Experts estimate that more than 1.3 million Latino families will lose their homes to foreclosure between 2009 and 2012. The financial setback and emotional blow from foreclosure is particularly devastating for Hispanic families who have little to fall back on.
via RISMedia.
Haven’t we heard this song before? “You too can get into your very own home with only $1,000 down! Step right up, step right up boys and girls…”
If my memory does not deceive me that caused the mess the housing market is still in today. Yet our illustrious Federal Government is insisting this is a path for revitalizing the housing market.
