Originally Posted By Mr X SuperDry just called it folks... The crash of 2030 will be monumental!! (so everyone buy risky stocks in 2029...and see if they can be the first one out of the pool!)
Originally Posted By tiggertoo Well, well, well… Where to you think this will go? <<Stocks tumble on subprime worries Stocks plunged Tuesday as troubles for subprime lenders kept piling up and U.S. retail sales came in weaker than anticipated, leading investors to brace for a wilting economy. The Dow Jones industrials fell more than 150 points. Investors fled the already deflated stocks of subprime mortgage lenders as the sector's problems mounted. The New York Stock Exchange said shortly before the opening bell it would immediately suspend trading in shares of New Century Financial Corp. and move to delist the stock. The lender, which saw trading in its shares halted throughout Monday's session, on Tuesday disclosed more details on the raft of financial hurdles it faces. Word from Accredited Home Lenders Holding Co. that it is grappling with a liquidity shortfall also bolstered concerns that the sector's troubles are widespread, as did a report from the Mortgage Bankers Association, which showed that mortgage delinquencies and foreclosures climbed in the last quarter of 2006. "The market's still jittery, and they're starting to get full-blown concerns over a bleed in the larger subprime mortgage market," said Matt Kelmon, portfolio manager of the Kelmoore Strategy Funds. He noted that the subprime market is a relatively small sector of the U.S. economy, but that Tuesday's selling was accentuated by options expiring and increased volatility since the market's big tumble in late February — a drop that was caused partially by the problems of subprime lenders, who loan to people with poor credit.>> <a href="http://news.yahoo.com/s/ap/20070313/ap_on_bi_st_ma_re/wall_street;_ylt=AnGumzq7E7lgtTleLA0yCpayBhIF" target="_blank">http://news.yahoo.com/s/ap/200 70313/ap_on_bi_st_ma_re/wall_street;_ylt=AnGumzq7E7lgtTleLA0yCpayBhIF</a>
Originally Posted By fkurucz >>No. You are not putting the ultimate responsibility where it lies. The fault is with people who are idiots. Anyone who thinks they can afford a $500,000 home on a $50,000 income could use some financial counseling stat.<< Yes they are idiots. But they were also fed a lot of baloney, especially the Realtors(tm) favorite canard: Buy now or you will priced out of the market forever, along with its corrolary: real estate always appreciates.
Originally Posted By fkurucz >>Then there's the consequences of all those new subdivisions that are either sitting empty due to a lack of buyers or turning into acres of rental property that won't be as well maintained as owner occupied homes. It's a real mess.<< I remember how that was handled in the wake of the S&L fiasco 15+ years ago: entire neighborhoods of empty, unsold property (especially condos) were bulldozed to the ground.
Originally Posted By fkurucz >>I've got to tell you... it doesn't take an MBA to tell that you can't afford a $500,000 mortgage on a $50,000 income. A sheet of paper, a pencil a calculator and a brain would be all you need.<< But everybody is doing it, and if we don't, we'll be priced out forever.....
Originally Posted By mrichmondj ^^ I wouldn't be surprised if you saw an increase in construction sites that mysteriously catch fire and burn to the ground in the next several months. There's already been a couple here in the San Diego area. Of course, they couldn't identify the "cause" of those fires -- I can make a good guess, though.
Originally Posted By fkurucz >>And you could tell these were college educated people. It's a scary world out there.<< Oh yes. I know more than a few couples with 150K incomes that have zero savings. But their leased BMW's look great in front of their neg am mortgage McMansion.
Originally Posted By fkurucz <<Where are they going to get that counseling? It's not taught in the schools, and banks, mortgage brokers, real estate agents, and anyone else involved in the industry is certainly not going to give it to them.>> Most of the time that "education" consists of being copycats. The Jone's just bought an $800,000 house and make less than we do. We obviously are doing something wrong. But its true that most Americans are financially illiterate.
Originally Posted By fkurucz >>I wouldn't be surprised if you saw an increase in construction sites that mysteriously catch fire and burn to the ground in the next several months. << Yup. But what I was referring to was the banks themselves. They realized that those condos (this was in Texas) were essentially unsellable in the foreseable future, so they just bulldozed them.
Originally Posted By fkurucz >>If the bank says you can, then it's the banks fault for misleading the public.<< It wasn't just the banks. The word on the street was that your house was going to appreciate 20% every year, and that it was fair game to use that "money in the bank" as income.
Originally Posted By mrichmondj Continued fallout from the sub-prime today. The stock markets fared pretty poorly as a result. Don't think it can bleed over into mainstream businesses? Here's a link to a WSJ article today: GM to Pay $1 Billion to GMAC <a href="http://online.wsj.com/article/SB117381491552635821.html?mod=home_whats_news_us" target="_blank">http://online.wsj.com/article/ SB117381491552635821.html?mod=home_whats_news_us</a> An excerpt: "DETROIT -- General Motors Corp. has agreed to pay approximately $1 billion in settlement charges to GMAC Financial Services by the end of the first quarter in relation to a change in the lending arm's balance sheet. The cash settlement, announced Tuesday in GMAC's fourth-quarter financial report, is related to the impact that problems in the subprime mortgage segment, which focuses on borrowers with low credit scores, have had on GMAC's book value, people familiar with the settlement said. GMAC's ResCap mortgage arm has a sizable business in the subprime market, which has come under considerable pressure in recent months as delinquencies rise, leading several mortgage lenders to shutter operations. For the fourth quarter, ResCap posted an operating loss of $651 million, compared with a profit of $118 million in the prior-year period." For those not familiar with GMAC's involvement in the sub-prime lending business, you might be more familiar with the ubiquitous ads they ran on TV -- under the name of Ditech.com. Other "blue chips" in the news today for having exposure to sub-prime lending defaults include: Morgan Stanley, Citigroup, Goldman Sachs, Credit Suisse Group, and Bank of America. I'm sure the list will get lengthier in the weeks ahead. This ride is just beginning, I'm afraid.
Originally Posted By jonvn You know, we were actually talking a few weeks ago about the markets tanking. I didn't realize we were so prescient.
Originally Posted By Mr X >>>Word from Accredited Home Lenders Holding Co. that it is grappling with a liquidity shortfall also bolstered concerns that the sector's troubles are widespread, as did a report from the Mortgage Bankers Association, which showed that mortgage delinquencies and foreclosures climbed in the last quarter of 2006.<<< I opened a short sale on Accredited at $18 last week. Bought to cover this morning at $4.27. Boy, that was some fast cash! (just shorted H&R Block...and it crashed 11% in after hours) I am a stock market genius! ;D (just kidding...still a rank amateur really)
Originally Posted By Mr X Oh, by the way...Nikkei (Japan) and Hang Seng (Hong Kong) are both down over 500 points today!! If you have any mutual funds...well, nevermind. Probably too late at this point.
Originally Posted By Mr X Thanks. At this point, I'm guessing it's going to be another bad day, but good or bad I'm out...planning to unwind all my short positions today and tomorrow. Because, at this point, I'm guessing the Fed may step in (plus, some of the bigger fish are starting to eye these troubled companies as ripe for buyout). That's my guess anyway.
Originally Posted By Mr X Let's see if the Fed steps in with their plunge protection team later today... The DOW just broke below 12,000 for the first time in 4 months. :O
Originally Posted By Mr X Amazing stuff here. Weird to read what we were all thinking just a year and a half ago (and how many were spot-on in their analysis!).
Originally Posted By Dabob2 Whatever happened to mrichmondj? He was a good poster. OTOH, DouglasDubh might want to make himself scarce a little while longer based on his "economic analysis" shown here.
