Dusty

Prime Mortgages Are Also Going Sour

It is all in the Credit Suisse Mortgage Resets Charts. 'Subprime' is effectively over except for the crying and gnashing of teeth part.

The 'Alt-A' and 'Agency' and several other middle class and upper middle class kinds of adjustable real estate loans are only beginning to falter. 'Subprime' was almost a flash in the pan compared to what is just barely started in the Real Estate markets.

"Winter" this year should come early. If there is not a replay of 2008 this fall it is only because of the Federal programs that have pushed and stretched the financial environment like a chart drawn on the side of a rubber balloon. Nothing really changes, there is just a distortion in the lines. This will be a very long 'winter.'

This next phase of the Real Estate collapse will peak in February of 2012. By Christmas of 2013 most of us will be beginning to realize that it is under control but not 'over.' The most believable estimates I have seen say good stabilization by 2017 or maybe into 2018 and decent recovery so that there is a semblance of the new "Normal" by 2025.

That new "Normal" will encompass changes far beyond any ability to forecast or imagine because of the events about to happen in this Depression.

Watch Bank of America to Understand Where Economy Is Going

Subprime is over, all will be well! Uhnnn. . . Does anyone remember the spring of 2008? And then the summer of 2008? And then. . . the fall of 2008?

Now the credit card balances, soon the derivatives, then the Alt-A and other ARM mortgages will all come home.

What has occured so far, inclusive, is equivalent to the spring of 2008. Calendar 2009 will compare with the summer of 2008. Fall and winter is on the way, calendar 2010 and 2011 and some of 2012. Thirty consecutive months.

Let us see who or what survives. It will very likely be a new world by 2015.

BAC and others do not need to be nationalized. Having the US Government as a majority shareholder with major representation on the board might be enough and easier to back out of by 2020.

Bank of America Buyback Announcement: Who Cares?

I am a small investor. I bought BAC because my advisor said it was a good buy. $1K is a lot of money to me; I am trying to create an additional small income stream from dividends. I bought $1K of BAC a little more than a year ago and another 'unit' in October '07, both at about $52. Notice of the buyback arrived a few days ago and I checked with my broker. Special large commission (relative to my personal finances), $1.50 a share back to BAC special fee, repurchase only good for the next NYSE Business Day with BAC shares listing at about $15.00. I did, and do, feel insulted.

Before all of you start telling me how stupid I am or how everything I am doing is wrong, listen to my "strategy."

Chuck holes in the market come and go. Bear Markets come and go. "Unrealized P&L's" are mind games. All that matters is the cash of the dividends and at the moment I have a little more income than needed to pay the bills. For now the dividends get reinvested. I am trying to prepare for eventual problems.

If BAC and some others survive this mess then all is well. That is even if some dividends are reduced or even stopped for a while and then resumed. I do the best I can with the information available to me (necessarily mostly what I can find for free). FWIW, my dividend stream is currently averaging 8.20% of my initial investment. If any of the positions ends in a bankruptcy or compete shutdown kind of failure, I have a tax write-off.

My bottom line is that I feel insulted by the offer BAC made.

Bank of America: The Most Popular Dividend in America?

I bought some BAC in May and more in October of '07 because my advisory service said "buy." I consider myself a centerline 'average' micro investor and I will be ecstatic if BAC just survives, continues a dividend at all, and regains its relative position when this current mess is over in 2015 (?). Then I will still have my money and the bit of cash income necessary when it is really needed. No, I have a lot of small positions as diversified as I can manage.

And, Eagle-Chief, I mostly agree about gambling. I do think that with care and a little luck, dividends and a very small overall capital gain can be managed that will generate a better return than interest on most savings will. It is not about getting rich but rather a best shot at survival.