Then, if you really want to feel bad, there is this. I share the view that our political class is as out to lunch as it can possibly be regarding this financial crises. And it is a crises. Millions more homes will have mortgages that are ARM (Adjustable Rate) and their new rates will be recalculated very soon. With falling home prices these will turn into foreclosures too. Forget everything you've heard and everything you've tried to ignore. It has all been made irrelevant.
From the moment the next president takes office, one issue will overwhelm all others: the American financial crisis. The Federal Reserve has been taking extraordinary measures for more than half a year to contain the spreading misery, including recently brokering the bailout of Bear Stearns. But the damage continues to spread.From the source piece in Portfolio Magazine by Jesse Esinger, not exactly a lightweight, but not a recognized expert either. Eisinger won a Business Journalist of the Year Award in 2003 for his coverage of accounting irregularities at the Irish drugmaker Elan. Eisinger also covered biotechnology and pharmaceuticals for TheStreet.com and Dow Jones Newswires. His piece is logical, detailed, and seemingly unassailable.
Is it that bad? Well, yes. The threat now is to the foundation of our economic structure. Faith in the financial system is crumbling. Because of the scope of the problem, dealing with its aftermath will dominate the next president's entire agenda. We're approaching the worst financial crisis of the post-World War II era, worse than the savings-and-loan mess and worse than the stagflation of the 1970s. It's not just a Wall Street problem, nor does it encompass only housing (which would be bad enough). This is a lending bubble, abetted by people who borrowed against their homes, racked up credit-card debt, and loaded up with possessions. And it extends far beyond that, to indebted commercial-real-estate companies, Wall Street firms, and banks.
Then there is this depressing analysis of Bernanke and an even worse one of Greenspan. The good news? My dog died and left me a fortune.
3 comments:
The bulk of the ARM resets occur in...2011! There's gonna be a tidal wave of housekeys being thrown back at the banks.
This from WSJ: n 2008 interest rates will be reset upward on $362 billion worth of adjustable-rate subprime mortgages [ARMs] -- a scenario that could significantly worsen the already serious subprime crisis, according to a report in Saturday's Wall Street Journal. Main thing is that the asset value has deteriorated so badly that it is actually smart to just walk away. Home owners are "belly" up with no way to salvage things.
The good news? My dog died and left me a fortune.
I never let the dog die until after tax season is over. I need the deduction.
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