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Subprime crisis= no crisis
- Thread starter myminitrading
- Start date
Quote from NasdaqTrader:
http://www.realtytrac.com/ContentManagement/pressrelease.aspx?channeled=9&item=1855&accent=64847
42% year over year increase in foreclosures in the country
Look at the "percentage of household in foreclosure" for the entire United States - 1.1%
Yes, that is a fraction over one percent, you read that right - even at so called historically high levels (normal range = .49 to .89%) this is ONLY ONE OUT OF A HUNDRED U.S. HOUSEHOLDS ARE IN FORECLOSURE.
The media is so liberal and biased and have been distorting the truth about our economy for years (every time a Republican is in office)
PS How do I know all this is true? I am in the mortgage industry.
And you want to know what took down all of the sub-prime lenders? It was lending too high Loan-to-values on Non-Owner Occupied homes (Investment) - they got caught with big paper they could no longer foist off on Wall Street.
Most of them were pass-through lenders that do not have deep pockets to begin with so it broke them - like any market where the weak hands get shook out.
New Century was just a horribly run company, period - their failure is no suprise - they are just another hidden losses/bookkeeping scandal. They are not an accurate reflection of the market.
Look at the real numbers, it is not very many poor minority families getting hurt or even very many people on ARM loans adjusting up. It is greedy ignorant investors that bought the top and now got crushed.
And one final note - If you have an ARM, and keep screwing up by paying it late and maxing out your other accounts so you can't refinance, well, then you suffer like any other irresponsible person.
Anyone who manages their finances correctly has nothing to fear from creative loans that save people a lot of money in payments and interest when used PROPERLY along with other resources.
The banking industry loves to support the notion that everyone should have a 30 year fixed loan for "safety" - but the truth is they make the most money from them in the first 5 years compared to other loans - look at an amortization chart if you don't believe me. (I will debate this to the death and pure math supports me so don't even try)
And the average time in a home now is 7 years, and re-fi's average 3.75 years - then that same 30 fixed gets closed out in 3 - 7 years and the bank made several thousand more dollars in finance charges compare to a lower rate loan like a 5 year fixed rate ARM.
This whole fiasco has just been another way for losers to cry out "Yes, I am a victim too - it's not my fault".
Quote from traderdragon2:
In hot areas like san diego, 265% increase YOY in foreclosures.
The majority of loans were ARM + interest only.
Given that were a consumer state, and everyone is spending every dime on their mortgage, how could it NOT affect the economy?
Things are going to get worse, not better for a while.
We are still 2-3 deviations out of historical whack. Something has to give.
Median income here is 65K
Median detached home in 800K
Less than 5% of people can afford a home.
How is the richest 5% going to push home prices up alone???
We wont see real new highs for a decade at least.
San Diego is aberrant and not an accurate reflection of the mortgage or housing market
Housing alone will nto sink the economy, but I have some concern about the drop in MEW's*. That was a big lifeblood of money for the economy in a time when inflation adjusted wages were declining, and housing costs were eating up more and more real income. with the declines in home prices in most US markets, MEW's are bound to shring considerable as there is less "profit" to tap in the home piggy bank.
Thus, the big question becomes where will the consumer who has stagnant wages and no piggy bank to tap anymore get their discretionary income?
We also must keep in mind that lending standars have significantly tightened up of late as well. The nod and a wink appraisals are gonna go away with theis sub-prime mess, and true pricing (at lower and lower prices in some cases) is gonna take hold.
And beyond that one, with the Democrats in congress making noises about more taxes, regulation and hearings, we are seeing a significant drop off in capital expenditures in the US. Business is clearly in no mood to be slapped about by the new ruling class in DC so they are tightening their purse strings.
all in all, we are seeing adefinite tightening of the credit cycle purse strings on the part of lenders, business, and I suspect very soon consumers.
* Mortgage Equity Withdrawals
Thus, the big question becomes where will the consumer who has stagnant wages and no piggy bank to tap anymore get their discretionary income?
We also must keep in mind that lending standars have significantly tightened up of late as well. The nod and a wink appraisals are gonna go away with theis sub-prime mess, and true pricing (at lower and lower prices in some cases) is gonna take hold.
And beyond that one, with the Democrats in congress making noises about more taxes, regulation and hearings, we are seeing a significant drop off in capital expenditures in the US. Business is clearly in no mood to be slapped about by the new ruling class in DC so they are tightening their purse strings.
all in all, we are seeing adefinite tightening of the credit cycle purse strings on the part of lenders, business, and I suspect very soon consumers.
* Mortgage Equity Withdrawals
Quote from slapshot:
Look at the "percentage of household in foreclosure" for the entire United States - 1.1%
Yes, that is a fraction over one percent, you read that right - even at so called historically high levels (normal range = .49 to .89%) this is ONLY ONE OUT OF A HUNDRED U.S. HOUSEHOLDS ARE IN FORECLOSURE.
The media is so liberal and biased and have been distorting the truth about our economy for years (every time a Republican is in office)
PS How do I know all this is true? I am in the mortgage industry.
And you want to know what took down all of the sub-prime lenders? It was lending too high Loan-to-values on Non-Owner Occupied homes (Investment) - they got caught with big paper they could no longer foist off on Wall Street.
Most of them were pass-through lenders that do not have deep pockets to begin with so it broke them - like any market where the weak hands get shook out.
New Century was just a horribly run company, period - their failure is no suprise - they are just another hidden losses/bookkeeping scandal. They are not an accurate reflection of the market.
Look at the real numbers, it is not very many poor minority families getting hurt or even very many people on ARM loans adjusting up. It is greedy ignorant investors that bought the top and now got crushed.
And one final note - If you have an ARM, and keep screwing up by paying it late and maxing out your other accounts so you can't refinance, well, then you suffer like any other irresponsible person.
Anyone who manages their finances correctly has nothing to fear from creative loans that save people a lot of money in payments and interest when used PROPERLY along with other resources.
The banking industry loves to support the notion that everyone should have a 30 year fixed loan for "safety" - but the truth is they make the most money from them in the first 5 years compared to other loans - look at an amortization chart if you don't believe me. (I will debate this to the death and pure math supports me so don't even try)
And the average time in a home now is 7 years, and re-fi's average 3.75 years - then that same 30 fixed gets closed out in 3 - 7 years and the bank made several thousand more dollars in finance charges compare to a lower rate loan like a 5 year fixed rate ARM.
This whole fiasco has just been another way for losers to cry out "Yes, I am a victim too - it's not my fault".
<b>well said!</b>
Quote from slapshot:
Look at the "percentage of household in foreclosure" for the entire United States - 1.1%
Yes, that is a fraction over one percent, you read that right - even at so called historically high levels (normal range = .49 to .89%) this is ONLY ONE OUT OF A HUNDRED U.S. HOUSEHOLDS ARE IN FORECLOSURE.
The media is so liberal and biased and have been distorting the truth about our economy for years (every time a Republican is in office)
PS How do I know all this is true? I am in the mortgage industry.
And you want to know what took down all of the sub-prime lenders? It was lending too high Loan-to-values on Non-Owner Occupied homes (Investment) - they got caught with big paper they could no longer foist off on Wall Street.
Most of them were pass-through lenders that do not have deep pockets to begin with so it broke them - like any market where the weak hands get shook out.
New Century was just a horribly run company, period - their failure is no suprise - they are just another hidden losses/bookkeeping scandal. They are not an accurate reflection of the market.
Look at the real numbers, it is not very many poor minority families getting hurt or even very many people on ARM loans adjusting up. It is greedy ignorant investors that bought the top and now got crushed.
And one final note - If you have an ARM, and keep screwing up by paying it late and maxing out your other accounts so you can't refinance, well, then you suffer like any other irresponsible person.
Anyone who manages their finances correctly has nothing to fear from creative loans that save people a lot of money in payments and interest when used PROPERLY along with other resources.
The banking industry loves to support the notion that everyone should have a 30 year fixed loan for "safety" - but the truth is they make the most money from them in the first 5 years compared to other loans - look at an amortization chart if you don't believe me. (I will debate this to the death and pure math supports me so don't even try)
And the average time in a home now is 7 years, and re-fi's average 3.75 years - then that same 30 fixed gets closed out in 3 - 7 years and the bank made several thousand more dollars in finance charges compare to a lower rate loan like a 5 year fixed rate ARM.
This whole fiasco has just been another way for losers to cry out "Yes, I am a victim too - it's not my fault".
Then you agree, its a made up crisis?
"I think I will start a new business offering a hedging service to smaller companies...."
Mini.
I think it is an excellent idea. It would be an easy sell with the right approach. I had a delivery service, you could have sold me gasoline futures.
Two problems. One, I didn't know they existed. Secondly, I am busy. But I have money to invest, you better make the approach consistent, be right on target on what hedge would work, It would have taken you five minutes to sell me.
Small businesses know risk and have a unique attitude to loss from risk. Selling me a Mutual Fund is bs, link the investment into the business profile.
Example, I invested in a co I did business with. I did well. Cashed out. Now what? The idiot broker calls me up and suggests SUNW. Needless to say, ta ta to cash. He knew less about SUNW than I did, or he needed my shares to short and was smarter than the average bear. Get my drift?
Mini.
I think it is an excellent idea. It would be an easy sell with the right approach. I had a delivery service, you could have sold me gasoline futures.
Two problems. One, I didn't know they existed. Secondly, I am busy. But I have money to invest, you better make the approach consistent, be right on target on what hedge would work, It would have taken you five minutes to sell me.
Small businesses know risk and have a unique attitude to loss from risk. Selling me a Mutual Fund is bs, link the investment into the business profile.
Example, I invested in a co I did business with. I did well. Cashed out. Now what? The idiot broker calls me up and suggests SUNW. Needless to say, ta ta to cash. He knew less about SUNW than I did, or he needed my shares to short and was smarter than the average bear. Get my drift?
"Look at the "percentage of household in foreclosure" for the entire United States - 1.1%"
Very misleading. Whats california's foreclosure rate now? I think we just hit 15%.
What percentage of the economy does california represent? Over 50%
Now rethink that.
Who cares if a bunch of dead areas with little economic impact pull that average down when the important areas that really drive the economy are in a lot of trouble.
In a consumer run economy where most of the action comes from places like the big cities of Cali, NY, etc, and everyone is stretched out so thin they are barely making their mortgage payments with reseting interest only loans and climbing arms, where are they gonna get their spending cash????
Sure, some will refi to what? A higher, but fixed rate. Now they perma-bleed, yaaay. No spending cash = bad for economy.
Very misleading. Whats california's foreclosure rate now? I think we just hit 15%.
What percentage of the economy does california represent? Over 50%
Now rethink that.
Who cares if a bunch of dead areas with little economic impact pull that average down when the important areas that really drive the economy are in a lot of trouble.
In a consumer run economy where most of the action comes from places like the big cities of Cali, NY, etc, and everyone is stretched out so thin they are barely making their mortgage payments with reseting interest only loans and climbing arms, where are they gonna get their spending cash????
Sure, some will refi to what? A higher, but fixed rate. Now they perma-bleed, yaaay. No spending cash = bad for economy.