No facts to back it up?
Really?
Well lets just see whats been going on in the last 2 weeks shall we? You think its simply sub-prime.. ok then...
Here we go:
Nice article about how money is exiting the mortgage markets completely, not just sub prime, but ALL mortgage paper has become difficult to move, A, Full Doc, buyers are bailing on mortgage backed securities of all types, not just sub prime.. and its impacting GLOBAL markets, not just the US and not just Sub Prime.
Mortgage problems in AUSTRALIA
http://www.reuters.com/article/gc06/idUSN0832017120070810
How this is effecting credit conditions around the globe! Not just in mortgage industries, and not just in the west.
Alt-A loans which are well qualified buyers who cannot document income, or do not wish to jump through hoops to document all income (Generally Higher Income, Entrepeneurs and the like) are now having difficulty getting loans on houses.
Lehman rates the current credit tightening a 7 out of 10 (10 being the worst) Forecasts are now at $200 BILLION in losses to investors and homeowners... the S&L Crisis was about 125 Billion... and frankly I think the estimates are LOW.
You can cover your eyes and think this is just some minor thing, feel free, but the facts are out there.. you choose to ignore them, that’s up to you.
Will the economy eventually recover? Sure... but this isn’t some blip on the radar, and its going to get far far far uglier, before it gets better.
This is NYT hype. My 76 year old widowed mother just re financed her house 4 days ago with a $1200 a month income. Her rate was 7 3/8% in Texas. I can write articles all day long about how a bank won't finance a jumbo loan for 6% if the property is $300 a ft and the guy has nada to put down on it. Yes, those days are most likely over for awhile. The world won't come to an end if the bank requires 5% down, that you have good credit, you have a job, and the price of the house reflects the current market conditions.
The economy is booming right now, 80% of companies reporting are beating their estimates, the market JUST hit an ALL TIME HIGH, and it's August. The market is looking for a reason to go down right now.
If unemployment goes to 6%, inflation goes above 3%-4%, or we get another attack, or the worst of all, the Dems take the white house, then I'll worry.
Certainly, there is a liquidity problem, but I question whether there is a credit-quality problem outside of the subprime market. The Alt-A market, which are NOT “well qualified borrowers” but are borrowers just above subprime credit quality, obviously should see some spillover. But again, it is only about 10-15 percent of the mortgage market even with the subprime portion. The prime market for 30 year fixed rate mortgages, which is more than 80 percent of the market, has delinquencies of less than 1 percent. If you see problems in this part of the market, then I’ll buy into your story, but not until then . . . . Oherwise, go back to shorting your stocks.