Cazimi

The CDS World Depends on Italy and Spain - Who Knew?

Interesting - Countrywide + Merrill Lynch + whatever BofA already had would put BofA at either #3 or #2 on this list.

U.S. Banking Crisis Turning Global

If there is a global contagion, then it's gold, Swiss govies, and 40 acres and a mule

NYT - 'Prime Loans About to Implode': Where's the Evidence?

Matt - I have been a very successful mortgage broker for over sixteen years in Marin County, California. The problem that Vikas writes about is very real. From my perspective the real mortgage crisis is coming in 2009, and it will dwarf the sub-prime mess. There is a perfect storm coming in the mortgage world. Declining values and the new aversion to risk are causing lenders to be increasingly restrictive; the almost complete disappearance of stated income loans, combined with rising loan-to-values caused by deteriorating prices, is making it impossible for many borrowers to refinance out of the 5 year fixed loans they got in 2003 and 2004. On top of that lenders are freezing equity lines, the only life line that many consumers have. I spend my days telling borrower after borrower that they cannot refinance, cannot buy, cannot take any equity out of their homes - and these are generally people with excellent credit and substantial equity. As these people are forced to sell there will be more pressure on prices, making the problem worse. From my seat, I see unequivocally that the problem is going to get much, much worse before we hit bottom. By far the biggest lender on the Alt-A side was Countrywide, and a large portion of those loans were five year fixed interest only.

Wachovia CEO's Insider Buying Is Another Indication of a Bottom

I agree with squashnut, bet this was paid for with a loan from Wachovia. These guys can't put out the fire, all they can do is bottle up the smoke for short periods so things look better. Bears will ride this down again

Introduction to a Long Lecture on Oil

One interesting implication is that the oil-producing countries have an economic interest in seeing the major oil-consuming nations develop more effective conservation measures. Keeping oil prices high enough to spur conservation, but not so high as to cripple the system, would be in the best interest of a producer of an exhaustible asset who has a long time horizon. The analogy is a parasite that increases its feeding to drain its host whenever its host is feeling vibrant, but limits its feeding enough to keep its host healthy enough for the parasite to feed, thus maximizing the life-cycle of the parasite.

Signs That Foreclosures May Be Peaking

I agree with drmalaka. You also need to remember that interest rates will move up quickly as the economy begins to pick up speed. A 2.5% increase in someone's mortgage rate will translate into a 30% increase in their monthly payment. Also, housing prices lag into a recovery. Means that much higher house payments as the economy improves won't be followed by a rapid increase in values. Everybody tries to treat the housing market like the stock market; it is a slow moving beast, the foreclosures will be dripping on to the market for several years, keeping MBS investors skittish, credit tight, and consumer's miserable.

The Mortgage Crisis: Time for Real Solutions

The mortgage crisis has gone far beyond sub-prime borrowers facing foreclosure. The Wall Street firms that securitized mortgages, and the ratings agencies that abetted, sold the securities with the assumption that home prices would not suffer a meaningful decline - ever. Putting aside that this is a ridiculous assumption, now, investors who were burned by Wall Street bs are refusing to buy the good mortgage-backed stuff. Thornburg, a first-class operator with the highest quality mortgage paper, is the poster-child for a potentially cataclysmic problem. We are entering the downward spiral, self-fulfilling prophecy stage, where fear-based tightening lending standards take good borrowers out of the market, lowering demand, which lowers prices, which creates more fear-based credit-tightening, which... Restoring confidence in MBS is going to take an explicit guarantee by the govt. of agency paper at least, and it needs to be done soon. BTW the WSJ will scream bail-out, but if this revives the MBS market there won't be anybody to bail because the floor will be in place on value.