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Take A Trip Back To 2007

Mike

Well-known member
GREENSPAN’S BLOODY FINGERPRINTS

The problems began when Greenspan dropped interest rates to 1% in 2003 for more than a year pumping trillions of low interest credit into the economy. This created the appearance of prosperity but it also inflated a massive equity bubble in housing which is now in its death throes. The Fed “rubber stamped” many of the “creative financing” scams which lowered lending standards and turned the subprime fiasco into a $1.5 trillion doomsday machine.

The devastation in real estate is almost too vast to comprehend. The mortgage bubble is roughly $5.5 trillion, and yet, prices have just begun to fall. It’s a long way to the bottom and there’s bound to be plenty of bloodshed ahead. Two million homeowners will lose their homes. 151 mortgage lenders have already gone belly up. Many of the hedge funds—which are loaded with billions of dollars in “mortgage-backed” securities are struggling to stay alive. Perhaps the most shocking projection was made by Yale University Professor, Robert Schiller, who believes that home prices could decline as much as 50% in some of the “hotter markets”. (Schiller’s book “Irrational Exuberance” predicted the dot.com bust before it took place) The effects on the US economy would be considerable. If other factors come into play—like a stock market crash and a subsequent period of deflation—we could see housing prices descend 90% as they did between 1928 and 1933.

It’s possible.

Typically, housing bubbles deflate very slowly, over a period of 5 to 10 years. Not this time. Credit problems in the broader market are speeding up the pace of the decline. The subprime sarcoma has spread to all loan categories and filtered into the banking system. This is forcing the banks to hoard reserves to cover their potential losses (from CDOs and mortgage-backed bonds “gone bad”). Now, even credit worthy applicants are being turned away on new mortgages. At the same time, “nearly half of borrowers with adjustable rate mortgages were not able to refinance their loans. That’s a major concern for policymakers as an estimated 2.5 million mortgages given to borrowers with weak credit will reset at higher rates by the end of next year.” (Associated Press)

Think about that. It’s no longer just a matter of 40% of loan-types disappearing overnight (Subprime, Alt-A, piggyback, negative amortization, interest only etc). Even people with good credit are being rejected because the banks are hoarding capital. That suggests the banks are in dire straights and hiding losses that are kept off their balance sheets. (more on this later)

So, it’s harder to get a mortgage. And, if you already have one you may not be able to roll it over. This will greatly accelerate the rate of the housing crash. (In fact, the LA Business Journal reported on Sunday that home sales plunged 50% in one month. We can expect to see similar numbers in all the hot spots.)

Another:

http://www.informationclearinghouse.info/article17214.htm
 

TexasBred

Well-known member
And now the President wants to "Lower interest rates and lower payments" so these same people can stay in their homes. Seems we've already done this once and that's when the problem started
 

aplusmnt

Well-known member
TexasBred said:
And now the President wants to "Lower interest rates and lower payments" so these same people can stay in their homes. Seems we've already done this once and that's when the problem started

He just wants to do as Clinton did, pass the problem on down the line for a future President to deal with. Democrats never want to pay the price now it is always lets put it off, lets get elected and stay in power and then maybe it will explode at a time we can blame Republicans. And if nothing else my children or grandchildren can pay for it as long as I do not have to pay now!
 
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