Your House, My House, What happened to Investment portfolio?
Your House, My House, What happened to Investment portfolio?
By Only Me
Like a summer thunderstorm the news has been gushing out the last few days, Sub Prime mortgage industry in chaos. Stocks are falling like brick from the twin towers and The NY Stock Exchange has even suspended trading for some.
Big banks that hold tons of worthless paper are worried and bankruptcy looms on the horizon for the mortgage companies in the Sub Prime Market. I read that many are blaming Greenspan for this because of his easy money policy subsequent to the September 11, 2001 bombing of the World Trade Center. In fact he was speaking in Boca Raton, Florida today and said he suspects this housing slowdown will last awhile. He did say the problems were based more on too high prices rather than bad lending practices.
Whatever the cause, the effects have been noted word-wide. The Asia Times has a very interesting article posted today about this subject. So is this the sequel to the 70’s & 80’s Savings and Loan bust that cost taxpayers a bundle? I smell a government bail-Out hold on to your pocketbook ladies & gentlemen. Any bets on who brings up the subject first?
My money is on one of the Presidential wanabes. It will be clothed in the mantle of National Security I’m thinking. Remember the Little Abner musical long time ago? Wasn’t there a song went something like “What’s good for General Bullmose is good for the USA”.
Some links:
http://www.atimes.com/atimes/Front_Page.html
http://www.azcentral.com/arizonarepublic/business/articles/0313biz-talton0313.html
http://www.rgemonitor.com/blog/roubini/178576
http://americablog.blogspot.com/2007/03/trouble-for-big-finance-subprime-bank.html
1 comment:
well, the economic house of cards was known to be pretty shaky for quite a while.
we have talked about the housing bubble, and, behold, the weakest link is the lending to unqualified individuals.
Didn't this happen back during the savings and Loans scandals and subsequent bailouts, then the big failure (i forget the name, Long Term Capital?) in the derivatives market: we are always paying to bail out the sonovabitches. with our tax money.
man, i have absolutely no quarrel with paying taxes for the common good, but so much goes to bail out wealthy investors.
so now some sub prime houses bite the dust.
whose pockets are those guys' hands in?
it will not sink the ship. the market is much more diverse that the relatively small impact of foreclosures and lender bankruptcies.
But the way that I understand derivative markets: that this is where the problem multiplies exponentially, is that risk gets spread to the broader market, and will affect a fairly large slice of the market.
let's see how this plays out.
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