Quote from S2007S:
I read through some of these numbers and I think how can these talking heads think the housing market has bottomed, what kept this economy hot the past 5-7 years was people sucking billions of dollars from their houses. Now with foreclosures at fresh highs, arms resetting and a consumer who cant borrow against their houses like they used too, where will this money come from.
Here are some more numbers you should keep in mind. Next time they say housing has bottomed read this over and over:
In 1980, the total amount of outstanding mortgage debt in the U.S. was $1.4 trillion. By 1990, the amount had more than doubled to $3.8 trillion. But things really began taking off in 1999 and 2000, when outstanding mortgages rose from $6.3 trillion to $13 trillion as of the end of 2006.
As a whole, about $6.5 trillion in mortgage debt (about half of total mortgage debt) is now held in these kinds of securitizations, according to government data--an increase from $372 billion in 1985.
You have the creation of an entirely new financial instrument--one that is capable of transmitting the crisis of one sector of mortgage loans throughout the financial world.
