Snuggles

Putting $1T Subprime Mortgage Losses in Perspective

Perry is right. You see, the top 20% of US households control 84.5% of household wealth. Here is some linkage:

sociology.ucsc.edu/who...

Granted, these numbers only go up to 2001, and I'm sure the progressive policies of the Bush administration have helped that wealth to "trickle down" to the masses over the intervening years, but you get the picture. How many sub-prime loans do you think were taken out by the rich?

So yes, Perry you are quite correct: Normal folk can all pretty much go directly to the poor house at this point (do not pass go) & it won't materially affect US household wealth.

The Long Case for U.S. Equities

I may be able to accept your argument that the US market is over sold, and over-due for a bounce but...

What about currency effects? Implicit in being over-weight in US equities is a bet that the USD ain't going much lower. There's an argument to be made for being invested in emerging markets as a currency hedge if nothing else...

Piper Defends GSEs After Major Kick in Fannie from Mr. Market

The problem here is lack of transparency in a big chunk of the instruments these guys are stuck holding. Since the banks have been delaying (lying about) losses & their recognition, everyone assumes the worst & that more capital will be needed by the GSE's. Hence, the GSE stocks tank, credit ratings are lowered and the prophecy becomes self-fulfilling. Elegant. CDO's, securitization & tranching should be outlawed. These are instruments that are difficult to value & reduce market transparency. Lack of transparency & the ability for rumors to take hold has precipitated more than its share of bank runs over the years...

Two More Homebuilders Go Bust

MBIA short interest is currently at 26%, 6 days to cover. That is high but certainly not enough to provoke a death-spiral for the company. All you guys blaming the shorts for the stock price action need to take a step back and look at the fundamentals for these companies. Fact is they got caught with their pants down insuring CDO / subprime toxic waste and now their continued survival is no longer guaranteed (short a bailout).
Go figure that this turn of events should materially effect their respective stock prices? Perhaps we should outlaw short selling to protect these "pillars of the economy" from failure?

Foreclosures Prove Loan Modification Isn't Working

"...In the meantime, because so many problem mortgages are securitized in pools, banks cannot act even if they wanted to..."

I don't understand why more hasn't been made of this fact. Securitization has made it infinitely more difficult to conduct work-outs with borrowers. I find it highly ironic that a tool that was supposed to mitigate risk is actually going to help accelerate losses.