Mortgage defaults growing, AIG says

http://money.cnn.com/2007/08/09/news/economy/bc.aig.subprime.reut/index.htm?postversion=2007080908 ^ | 8-9-07

[dashing doofus]

I agree. Its a terrible thing for someone to lose their home, even if they made a mistake and the real estate agents and the lenders assured them that the house price would always go up.

I think it (rising delinquencies on subprime) is a problem, but not one that is going to destabilize the whole economy. Its an issue, like rising gasoline prices, the falling US dollar, etc. Today, I read in my local paper that foreclosures are lower today than in the recession of the early 90s — the one the media sensationalized and catapulted Slick Willie into office.

The markets will correct, fradulent lenders will be punished (I hope), and caveat emptor (for investors and mortgagees) still applies.

[Moonman62]

I’m calling for market rates which would be lower than the rates we have now.

[dashing doofus]

Fed futures are now staying there is a 100% chance of a 25bps cut in the fed funds rate by September. Its tricky, though because the dollar has fallen, and with lower rates could fall further. Of course, the news from Europe probably means the dollar strengthens today.

Balancing act....

[Hydroshock]

Sorry if I sem somewhat rude but this train wreck was easy to see and now to hear many scream for a bailout is sickening. If you plant the field you reep the crops.

[Moonman62]

I get emails from the CME about their Fed futures, but they only send them out a few days before an FOMC meeting, and the probability for a rate cut for the meeting just concluded was 12%. Where are you getting this indicator for September? I like that kind of stuff.

[Hydroshock]

I disagree, if anything they would be higher with real inflation being what it is.

[Moonman62]

Of course, the news from Europe probably means the dollar strengthens today.

We need to coordinate with Europe and get them to stop raising their rates, but there is zero chance W will do that.

[Moonman62]

The funds rate is higher than the rate for the 30 year bond. Do you have any idea what they yield curve is?

[Hydroshock]

The yeild curve is meaningless when you look at the current market, with gas, food, and housing doing what it is doing.

[Moonman62]

You're like Bernanke. You don't like the yield curve because it doesn't agree with your feelings. Like it or not, it is a market indicator that compares yields of securities at different maturities. An overnight loan should not carry an interest rate higher than a 30 year loan, or any loan of longer maturity. That's what the market says. If you don't agree with it, then you are for government intervention.

Like I said before, the Fed's credit cycle doesn't do anything to stop inflation.

[Hydroshock]

Inflation is the real enemy, and if the finance sector has to lay in the bed they made so be it.

[Moonman62]

Aren’t you mixing metaphors? Have you gotten any sleep?

[caver]

“to hear many scream for a bailout is sickening”

Yes, that’s the raeson we are seeing so many news article about the mortgage defaults. The liberal press is going nuts.

[Hydroshock]

It is not just the liberals, many in the financial sector or losing their shirts and want a bailout to keep the gravy train rolling. Problem is that even if rates are lower you would be a fool to buy mortgage backed securites for the forseeable future.

[CSM]

“When students get out of school owing 20, 30, 40 thousand dollars many of these loans can’t be repaid and are defaulted on as well.”

I have been working very hard to become debt free and when I start hammering my SL in March, I sent them a very large payment. Well, after that I received a nasty letter about the size of my payment and that I should not be paying it off that quickly. I gave them a call and offered them the choice that I would pay what I owe, at my pace, or that I could just default on the loan. Obviously they chose to let me make the large payments.

Sometimes I think they like the defaults so that they can turn to the government for the cash. I should be done with those fargin bastiges by November.....

[backhoe]

Appreciate it!

[Hydroshock]

Yep, my wife and I are also hitting debt hard. Being out of debt i sthe ultimate status symbol.

[CSM]

Better than a BMW!

[Hydroshock]

I drive a 2001 Jeep, but it is paid for.

[dashing doofus]

Bloomberg. Which can’t be posted here at FR. You should be able to find fed funds futures by googling, i think....