Dusty

Housing: Barron's Calls a Bottom

Credit Suisse published a chart of "Mortgage Resets" last winter. It showed a mountain range of "Subprime" all spring, a high, rough valley or plateau this summer and another mountain range of "Alt-A" on top of "Agency Resets" this Fall (September through December). From then to the early summer of 2012 it continues like now. My own take is that the Market has followed the Credit Suisse chart very well so far. When Mortgage Resets went up, the market went down. Each month as the next month's crisis loomed the big boys panicked and there were craters.

It all started in November from a significant high. Phase two is about to commence from a serious low. It will be very interesting to see how far down it can go by, say, Chinese New Year. Then it will still have a long way to go before the mortgage mess is actually "over."

Our economy has actually never recoverd from the Telecom Crash. It has just been riding the Housing Bubble. YYZ (above) reminded us that it took Canada five years to recover in the '90's. It could take the US ten or more, there is a lot more to fix. Add 10 to 2012 and the clear start of the recovery is in (gulp!) 2025?