Trying to Throw His Arms Around the Housing Crisis
Investment adviser John Lounsbury today tries to wrap his arms around the national housing crisis in a post on the investment blog Seeking Alpha. Here are three of his nine summary points: 1. It has been estimated that there will be 8.1 additional foreclosures by the end of 2012. This is 21% of all mortgages….
Investment adviser John Lounsbury today tries to wrap his arms around the national housing crisis in a post on the investment blog Seeking Alpha. Here are three of his nine summary points:
1. It has been estimated that there will be 8.1 additional foreclosures by the end of 2012. This is 21% of all mortgages.
2. It has been estimated that 19 million mortgagees will owe more than their house is worth by 2010. This is 50% of all mortgages.
3. It has been estimated that about 6.5 million mortgagees will not be able to afford their mortgage payments at some time during the term of the mortgage. This is 17% of all mortgages.
His conclusion? “Federal intervention to solve the housing crisis would consume too much resource that would be better used to stimulate future economic growth.”
Housing: Where Is the Bottom? [Seeking Alpha]
Graph from Credit Suisse
andrew lee:
thank you, I guess.
but it is still incomprehensible,
what is the deep yellow “Alt -A”?
what is the grey “Agency”?
is there a key somewhere I’m missing?
I say it’s bullshit.
I actually agree that our financial system, at the highest levels is, if not a Ponzi scheme, certainly a crooked and avaricious game of bluff. It is very disheartening to see the depth and breadth of the corruption, the avarice, the ill will, and the rapaciousness of these institutions and individuals. If this were a just world, the attorney general would sieze the assets of all the top fat cats on Wall street, including the yachts, ski homes, art, and swiss bank accounts and redistribute the proceeds to people who are at the risk of losing their homes due to the system’s corruption and incompetence. But I suppose that would be socialism, which is something we don’t think is very American.
“can anyone make heads or tails of that ridiculous graph?”
The graph shows that the subprime / mortgage crisis in not over until 2012.
Resets are when current low interest mortgages are reset with higher interest rates.
So the graph shows that through 2012, a high volume of mortgages are going to reset at higher interest rates. This will crunch numerous homeowners, and cause defaults, push down prices and kill consumer spending. Many people bought houses with mortgages that deferred payments to later years of the mortgage, on the assumption that housing values would rise enough so it wouldn’t matter. That assumption was wrong.
The problem is that people actually believe in free markets. That right there is a total crock of crap. When you take all this for what its worth you understand that the rules are only rules for the uneducated who didn’t learn enough to legally get by some of them. Also you understand that all this is just a ponzi scheme where the guys who pay more taxes are the biggest losers. Which I believe are the middle class. They pay the highest rates on their income and usually work the hardest. Sure we will pay off the deficit. Keep believing that and you understand that at one point hard assets will be the place to go. Right now cash is king…
can anyone make heads or tails of that ridiculous graph?
I agree that most financial analysis is total claptrap.
What ended the great depression was government action. But the government in question was Japan’s. When they decided to bomb our navy in Oahu, American unemployment dropped to near zero over night.
Hell no. Let all those wannabe homeowners go live in the street. Where is my TARP money? I have been paying rent on time for more than 15 years now. I had to move out of Carroll Gardens because of the Liberal Gentrefication movement raising rents to fuel their overspending glutny. And now the government wants to reward them? Reward them by kicking them out of “our” homes because they are not homeowners until they finish paying for them. Also why do I get to deduct only 8000 dollars as rental expenses from rent while I am paying 14,000 a year? Most homeowners don’t declare rental income and then even get a 400.00 dollar check in the mail from our city. When is this country going to go on the right path again?
Excuse my financial ignorance but why would the banks/lenders jack up the rates on these option ARMs when they know it will only lead to foreclosure? Seriously, I don’t get it.
I know they wouldn’t want to keep the teaser rate forever, but isn’t any revenue stream better than what they would receive in foreclosure?
Anyone care to enlighten?
“Federal intervention to solve the housing crisis…”
Price fixing is illegal. They (the powers that be, not the author of this piece) wanna fix home prices but then go after Christies and Sotheby’s. FREE THE MARKET!!!
BTW, what are “Agency” resets?
***Bid half off peak comps***
Johnny,
You’ll learn soon enough when the “stimulus plan” doesn’t work and our country is in the hole even more that you shouldn’t have trusted the government.
Sure prudent government spending could in theory help, but the government is the least prudent borrower and spender out there.
I’m not happy about it, but I think we’re looking at another Great Depression.
And this one could last much longer than the first one.
Bush will be remembered as the President who started it off, and Obama will go down in history as the guy who cemented it into place for decades with wasteful government borrowing and spending on a level never before seen in the history of the world.
At least we have Senator Burris from Illinois and Senator Franken from Minnesota to help Obama in these tough times.