Posted on 11/08/2007 7:57:14 AM PST by Hydroshock
Falling real estate prices, massive bank write-downs and a quickening drumbeat of slashed credit ratings adds up to one thing: The credit crunch has only just begun.
While no surprise, given that economies are coming out of a worldwide debt binge, the fact that loans are harder to get for even the best borrowers raises the risks of a recession.
It also puts the U.S. Federal Reserve in a tough spot, caught between the imperative of keeping the blood flowing in credit markets, and genuine concerns about inflation from more expensive food and energy.
(Excerpt) Read more at cnbc.com ...
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Why do I get the feeling I’m seeing some chapter in some Economic text 50 years from now being written. “Chapter 21 : Ass-stupid practices that were doomed to fail from the beginning.”
LOL, how true.
What I want to know is: Where is the unused credit going? The majority of US households are not directly affected by this, so they continue to contribute to their IRA’s, pension funds, and insurance policies. Where are those institutions putting their money now, since real estate was a huge placement component of those funds in the past? Clearly they’re not going to sit on it.
Bonds. Overseas currencies.
Yep, and what gets me is how many times in the past I have heard the things are different now. They aren’t.
>>Falling real estate prices, massive bank write-downs and a quickening drumbeat of slashed credit ratings adds up to one thing: The credit crunch has only just begun. <<
No SH**, Sherlock! What, did these guys just climb out from under a rock?
I knew where this was headed several years ago when the standard requirement of qualifying for a home loan for a monthly payment of ~30% of your take home pay was bumped to ~50%. That was goofy.
But it is the hight of responsibility compared to what it digressed to. And the bigger the bubble the bigger the pop.
This one grew to historically unprecidented proportions. The pop is going to be loud and long.
>>Why do I get the feeling I’m seeing some chapter in some Economic text 50 years from now being written. “Chapter 21 : Ass-stupid practices that were doomed to fail from the beginning.”
Or Ex-Texan two years ago!
This is unrelated, but I saw the most amazing thing on television the other day. It was essentially a “business talk show” that was staged in a bar. What are these people thinking? First they put that moron, Cramer, on TV who presents stock picks with all the seriousness of a carnival barker, then they host a business show in a ginmill.
The really, really scary thing is that folks watch these shows and believe they are getting information they can actually use.
bump
My Grandpa was a banker during the depression. One of his sons was a banker during the 1950-70's. The son graduated from Georgia Tech before the liberals took over. According to my banker uncle, the chapter has already been written - long ago. The only chapter remaining to be written is about the fools who let the crooks ruin the markets in the late 1900's after it happened in the early 1900's. If anyone takes notice, they will see that the same issues exist with respect to WWI, WWII and the coming new world war. Short sighted, consumption oriented, greedy, immoral people are never concerned about what happened before their current orgy.
Get back to me when a 1 bedroom, 1 bath, 500 sq. ft. home in Monterey "falls" to below 500,000 dollars.
Money is still available for worthy credit risks.
I am in the process of buying a new home and I have received FIRM committments from four lenders. The Builder is covering $7,000.00 of the closing costs and giving me another $5,000.00 in furnishing or decorating allowance. I am using the builders mortgage company to get all the allowances.
I haven’t worked since becoming disabled in Dec 2000. I am receiving a social Security disability pension and another small pension from a company where I had worked previously.
I do have a VA loan guarantee certificate which is helping a lot. The VA guarantee along with my guaranteed income is what is making the purchase possible.
My pensions will cover the mortgage with a little left over. My wife will be working for a few more years to cover our other living expenses.
The house we are having built has 6 bedrooms, 4 baths, 1 family room, 1 formal living room, 1 game room, 1 formal dining room, 1 breakfast nook, and a 2 car garage. It is 3500+ sq ft in size. Purchase price is $263,000.00. The same house at another of the builders sites is going for $303,000.00.
Used three bedroom houses in our area are going for more than what it costs for a NEW home. Selling a used house is very difficult because of the better deals on new homes.
The builder has just received the permit from the local authorities and hasn’t even begun construction yet. The house is expected to be completed in late January or early February with closing expected at that time.
We went to three different builders looking at houses and this was by far the very best thing available even though all three were offering great packages and allowances.
The builders are really desperate right now and I suspect that that they will be even more agreeable in the future.
I am getting a good interest rate and I expect it to go down even lower before we close.
This is being reported by CNBC...most of the negative stories I’ve seen are from the AP, NBC, Barron’s (Bearons, etc.
The MSM has been attempting to “talk” this economy into recessions since Bush took office. Every article has been “spun” into the negative.
Yes, oil is high. But why? The price has increase much more than the increase in demand.
There’s a credit crunch...in housing. I have a regional bank as a client. We are aggressively seeking business loans, home equity loans and mortgages.
The bubble may be bad in California, but they made their own problems. In Missouri, it’s not so bad.
Many of the “doom and gloomers” here on FR sound like a bunch of whining liberals.
Short gold and oil. Buy the dollar.
Flame on!
Think velocity. If you’re not familiar with it, go look it up.
Credit based on fractional reserves does not necessarily represent any asset.
see my post #21
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