Re: How will the subprime crisis ultimately affect our country?
 

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subprime isonly aa symptom of the larger problem, which ultimately will lead to national captivity.

[/ QUOTE ]There is a subtle pun in this post. Can anybody else find it?

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well it would be a great pun if it read:

"subprime is only aaa symptom..."

that'd be sweet....

other than that though i'm at a loss...let me know the pun if taht aint it...cause that means you got great punfinding eyes.

Barron

Re: How will the subprime crisis ultimately affect our country?
 

Subprime mortgages are a very small portion of the total amount of money lent in reality. The problem basically is the transparency of CDO deals in that the quality of the bonds is suspect and unknown. Therefore people don't want to touch them and also short term liquidity is a problem to lenders that hold the mortgage related bonds in their portfolio. It's more of a crisis in the MBS market than anything else. Remember lenders borrow short and lend long. In order to borrow short, lenders have to continuously borrow money from short duration lenders. When that money dries up there are severe problems. Liquidity in lending will probably be ok for conforming loans but I expect credit standards to be much higher and bigger down payments. I think some of the prices people pay for residential housing in some areas of the country is completely absurd and will come down. In many places it won't be that big of a deal. However, IMO the overpriced real estate tends to be in place where a lot of people live and a thus a lot of mortgage money is involved. IMO a slowdown in the housing industry will have an impact on the economy. How much remains to be seen but I'm fairly certain will see a recession in the near distant future. I hope I'm wrong about that.

Re: How will the subprime crisis ultimately affect our country?
 

Adios, thanks for the post.

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IMO a slowdown in the housing industry will have an impact on the economy. How much remains to be seen but I'm fairly certain will see a recession in the near distant future. I hope I'm wrong about that.

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This does appear to be the main concern. As I mentioned in my previous post, I am concerned about increased supply of houses and the decrease in prices. This could have a myriad of effects on our economy and society.

Re: How will the subprime crisis ultimately affect our country?
 

I'm far from being an expert, but I am a fairly busy home builder. Luckily my market never saw a big jump in house prices so sales have remained stable.

From my perspective the guys that are going to take the hit are those that were making and buying up these subprime loans, which I understand a lot of hedge funds were doing. A lot of people are going to have ruined credit, but they will still need places to live.

I think, in the end, this will have a minor inpact on the economy over the next two years.

As far as who will buy these foreclosed home, they will sell. For how much is the question. The loan companies can't hold them, so they have to sell them at auction for whatever they can get. I've put some time and thought into getting into this if the prices do fall. With a decent credit line a guy could buy a ton of property and just rent it out. There would be decent equity from the start and that would just grow as the market comes back. If I'm buying for 70 cents on the dollar, I could easily be renting to the same level of customer who previously owned the house for a price they could now afford.

Bottom line, people have to live somewhere. Homes and apartments weren't sitting empty because people were getting loans for bigger houses. The easy loans just meant those who would normal rent were buying and others were jumping up a level or two. Now a bunch of them will be back to renting.

As far as the general economy goes this is a blow, but I'm much more concerned about the value of the dollar and the impact that will have.

Re: How will the subprime crisis ultimately affect our country?
 

"I'm far from being an expert, but I am a fairly busy home builder. Luckily my market never saw a big jump in house prices so sales have remained stable."

thats a major point that most people miss reading the headlines. Prices are not in free-fall. There are a few speculative markets (Miami, Vegas, Phoenix/Scottsdale) that are taking some pricing hits, but in general prices have not come down very much at all. That may change as inventory continues to grow, and some people have to get out, but it hasnt happened yet. In two very high priced areas...Metro NY and Southern California, most sellers arent moving on price, and are leasing if they have to move, waiting out what is probably a short term storm.

As a builder im sure you know that housing starts were up last month. What would be more intersting to know is the price ranges of those starts. If they are mostly for what will be conforming loans, it doesnt mean much. If its starts of 417k+ homes that is a very significant and positive indicator.

Re: How will the subprime crisis ultimately affect our country?
 

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lol...is that like the captivity in which panda bears live in our national zoos?

seriously though, can you state more clearly what your'e trying to say?

thanks,
Barron

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read the bible. how do you think the jews got to be slaves in egypt?

Re: How will the subprime crisis ultimately affect our country?
 

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"subprime is only aaa symptom..."

[/ QUOTE ] That was it.

Re: How will the subprime crisis ultimately affect our country?
 

In a nutshell.

Money has become more expensive.

We have gone from a very cheap money environment to a more expensive money environment. Virtually all credit is now more expensive and central bank intervention into interest rates wont effect that to much as there is at present no trust in the banking system because no one knows who exactly is holding the toxic waste debt. Therefore commercial rates of money costs will remain high to reflect the perceived risk of lending.

Increased cost of money will undoubtedly have some "negative" effect on the economy.

Re: How will the subprime crisis ultimately affect our country?
 

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lol...is that like the captivity in which panda bears live in our national zoos?

seriously though, can you state more clearly what your'e trying to say?

thanks,
Barron

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read the bible. how do you think the jews got to be slaves in egypt?

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ya know, i've read the bible (old testament since i'm a jew) and it was a while ago.

i can't recall exactly HOW the jews became slaves in egypt just that at one point they were.

could you refresh my memory and then clearly state your point about how this relates to the "larger" problem of which subprime defaults are a "symptom"?

thanks,
Barron

Re: How will the subprime crisis ultimately affect our country?
 

another thing worthy of note:

the recent growing global markets and high employment rates here at home will provide some cushion from reduced spending resulting from high credit costs and th subprime mortgage meltdown.

further, the biggest impact so far has been localized, in relative terms, to financial markets, that, while still impacting the economy, don't have the same impact a bank run/panic or manufacturing crisis would ahve.

Barron