Housing Bubble Bursting?

[Greg Bell]

The stock market is booming , just like July 1929...Hmmm , sounds familar....

 

[Dee Dee]

For those who thought Rating Agencies were unbiased.

Reuters - Rating Agencies Scramble to Reassess Subprime Risk

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&Date=20070712&ID=7162728

NEW YORK (Reuters) - Rating companies began a new wave of rating cuts Thursday as they reassessed the fallout from deteriorating subprime loans, drawing increased scrutiny from investors who are questioning why the agencies failed to act earlier.

Moody's Investors Service and Standard & Poor's are ratcheting down ratings or revising downward prior forecasts on billions of dollars of debt due to their lowered outlooks on the U.S. housing market.

Lawyers Eye Raters, Underwriters in Subprime Cases

http://www.reuters.com/article/fundsFundsNews/idUSN1222629020070712?sp=true

NEW YORK (Reuters) - U.S. class-action lawyers who have sued subprime mortgage lenders are now scrutinizing Wall Street banks that sold packages of risky loans to investors and credit analysts that served up top ratings on the securities.

Litigation stemming from the collapse of the subprime mortgage market is expected to grow as more investors run for cover after suffering losses on bonds tied to mortgage-backed securities.

Plaintiffs' lawyers say they want to know more about the relationship between the credit rating services and investment banks that assembled complex debt structures known as collateralized debt obligations, or CDOs, tied to risky mortgages. Two leading rating services this week downgraded billions in subprime debt, but critics say they should have acted earlier.

 

[Steve Owen]

More bad news.

In the subprime arena:

http://www.inman.com/hstory.aspx?ID=63861

...GE Chairman and Chief Executive Officer Jeff Immelt. "We have made the decision to exit this business and substantially reduced our exposure by selling $3.7 billion of WMC loans in the quarter."

In new home sales and starts:

http://www.inman.com/hstory.aspx?ID=63863

Or is it?

Fitch analysts said affordability issues could also dampen demand for newly constructed homes. The average new-home price rose from $149,800 in 1990 to $305,900 in 2006, a 104.2 percent increase.

A bit of correction might be in order.

And of course, more bad news for foreclosures:

http://www.inman.com/hstory.aspx?ID=63862

We are going to get spillover into GDP. Book it. And we're going to see a serial credit panic. However, the disaster mongers are mistaken. Credit losses are distributed globally, and there is great long-term strength in housing (population growth, land scarcity, wealth...). The forecast here continues to be for a long period of flat prices in the Bubble Zones, but vastly more foreclosure damage from flat prices than previously modeled or imagined, the Great Hangover from the '01-'06 Mortgage Credit Party.

Once again, correction seems to be in order. If you are not losing your house, it's not really a housing recession.

 

[THOMAS MAZZEO]

Appears to be differing by area, I am in central Ca. and it appears to be snow balling, local paper reported today our area has the highest per capita foreclosure rate in the U.S. I think the Ballon has been stretched and is about to blow into a million pieces.I Talked to a Broker today, who does a pretty good job of checking value on his own before his office will order an appraisal, he siad as of today he has over 50 files on his desk that are so far off on value no need to even send out for an appraisal.

 

[Greg Bell]

Perhaps the devaluation will match 1930 to 1934...About 90%..Let's hope not..Watch the stock market.It will keep climbing to inflated prices and one day the bank of Fiji or Pudunk Idaho will fail and it's Katy bar the door...should be fun..

 

[Greg Bell]

Just change the date to Oct , 1929..


Stocks Up After Rally; S&P 500 Hits High

Jul 13 03:20 PM US/Eastern
By TIM PARADIS
AP Business Writer




View larger image

NEW YORK (AP) - Wall Street extended its gains Friday, with the Standard & Poor's 500 index breaking through a trading high set in March 2000 and the Dow Jones industrials passed the 13,900 mark for the first time.
Despite advances by the S&P and the Dow, the technology-laden Nasdaq composite index lagged. Despite the moves by the major indexes, advancing issues narrowly outpaced decliners on the New York Stock Exchange.

Nonetheless, investors still seemed upbeat about earnings and takeover activity and appeared only slightly disappointed by the Commerce Department's report that retail sales dropped 0.9 percent last month, following a revised 1.5 percent jump in May. The June figure was weaker than anticipated and marked the steepest decline in nearly two years.

"I think investors are overstating their moves on a day-to-day basis but over the long term we continue to trend upward," said Brian Levitt, corporate economist at OppenheimerFunds Inc. "I think that is reasonable given the strong global quality picture and the strong global growth picture."

In late afternoon trading Friday, the Dow rose 50.07, or 0.36 percent, to 13,911.80 after reaching a new trading high of 13,924.00 and putting the index within 75 points of 14,000. Relief that Alcoa won't pursue a deal with Alcan Inc. helped the Dow, as did solid quarterly results from GE, which sent the conglomerate's stock above the $40 mark and to a five-year high.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 5.46, or 0.35 percent, to 1,553.16 and the Nasdaq composite index rose 1.99, or 0.07 percent, to 2,703.72.

___

 

[moh malekpour]

Reuters - Rating Agencies Scramble to Reassess Subprime Risk

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&Date=20070712&ID=7162728



Lawyers Eye Raters, Underwriters in Subprime Cases

http://www.reuters.com/article/fundsFundsNews/idUSN1222629020070712?sp=true

Dee Dee,
Who is the next group in line to be scrutinized after they done with rating agencies?

 

[Steve Owen]

One thing we can be pretty sure of... when the stuff hits the fan, appraisers will take a portion of the blame. And, another thing we can be sure of, there will be changes... not necessarily all for the better.

 

[Greg Bell]

All the foreclosures will be blamed on the nasty ole appraiser.The depression will be blamed on the banks , that's fair..

 

[moh malekpour]

One thing we can be pretty sure of... when the stuff hits the fan, appraisers will take a portion of the blame. And, another thing we can be sure of, there will be changes... not necessarily all for the better.

Yep, you got it right. They are already talking about it and may soon act on it but I hope they don't lump the good and the bad together .