Mr. Boater

Calculating a Housing Bottom: Volume vs. Price

This is an interesting article asking an interesting question. However we must go to real data to find out just what the status of the real estate market is. The opinions do not mean anything if the basis for the opinion is bogus. Barclay's and Credit Suisse have put out charts listing the dollars worth of ARMS by type and the month of reset. Please look below for the status of the RE market. It is grim. We will see 3-4X the defaults 2009-2012 that we have seen so far. Therefor I say , based on real empirical, verifiable data thet the realbottom of the RE market will not come till 2012 or later.

Crash 2 is starting in May and running in neighborhoods near you till 2012.

I am sharing with you below a couple of powerful charts from Barclays and Credit Suisse. Europeans seem to tell a bit more truth than the American banks, probably because our banks have so much to hide.

The next downdraft--I call it Real Estate Crash 2, will start slowly in May 2009 and continue till mid year 2012. Possible the markets will try for a bottom early 2012 in anticipation of the end of the RE collapse.

The subprime mess was caused by 615 billion in loans buried in derivatives--I am guessing about 20-25% of those loans went bad. Many of those people are trying desperately to keep their homes.

The next session will incorporate 1.1 trillion of option and interest only ARMS held by thinly capitalized speculators who got in too late and got trapped in upside down loans. They are screwed. I think over 50% of these loans and their derivatives will go bad--2009-2011 will be very bad years for the housing market, labor, and the consumer. I see gold and the Dow meeting at 4000-5000, Bonds will be crushed.

Note the credit Suisse Chart at the bottom resets drop off starting end of 2008 and then a whole new series of Interest only and Option ARMS readjust starting May 2009 till late 2012. In the 615 billion subprime adjustments that started all of this mess, many people worked hard to try to keep their homes.

The new series of adjustments are weakly capitalized speculator held homes that the speculators are caught upside down in and cannot get out of the contracts. They will be wiped out by the resets increasing the mortgage payments beyond their ability to pay. These failures will do severe damage to what is left of the economy after the Paulson rape of the taxpayer.


The Option ARMs and Interest Only (IOs) loans scheduled to reset in the next few years will add more trouble. These loans represent about 15% of securitized loans and some have negatively amortized, increasing the payments and making refinancing more difficult. According to data from Barclay's, about $300 billion in option ARMs and $820 billion in IO's are set to recast. The results could be payment shocks over 80% for option ARMs and over 60% for IOs according to Barclay's.
Option ARM Recast and Payment Shock Forecast



Putting it all together......the months with the green tops were mostly the subprime arm resets which is about $615 billion till may 2009, which have caused all the problems we now have.


---the orange/pink tops are another whole set of resets just starting in 2009 which is about another $820 billion between 5/2009 and 6/2012. Anyone calling a "bottom" in real estate or the home construction industry simply is lying or do not know what they are talking about.

Recession, Rate Cuts and Stocks: Why This Time It's Different

People, Housing Crash 2 starts in May 2009. If you getback into stocks orbuy ahouse now you will catchthe falling knife for sure.

There is 1.1 trillion$ in option, liar, and interest only ARMS starting to reset in May 09. They run until November 2012. Housing prices are going down another 40% and only GOD knows what will happen to stocks and bonds.

U.S. Dollar Index Has 5th Biggest Decline Ever

The dollar is toasted. Jummy Rogers is getting out of the dollar, Steven Roach left New York for Hong Kong---thats good enough for me---hard to make money betting against these guys....and with so many dollars being printed its hard to stay in a market --best to buy gold stocks and dump the rest.

When Will the Dow Jones Reach a Bottom?

A "temporary" bottom may be found for a short while before continuing to the bottom of 4000-5000.

The next downdraft--I call it Real Estate Crash 2, will start slowly in May 2009 and continue till mid year 2012. Possible the markets will try for a bottom early 2012 in anticipation of the end of the RE collapse.

The subprime mess was caused by 615 billion in loans buried in derivatives--I am guessing about 20-25% of those loans went bad. Many of those people are trying desperately to keep their homes.

The next session will incorporate 1.1 trillion of option and interest only ARMS held by thinly capitalized speculators who got in too late and got trapped in upside down loans. They are screwed. I think over 50% of these loans and their derivatives will go bad--2009-2011 will be very bad years for the housing market, labor, and the consumer. I see gold and the Dow meeting at 4000-5000, Bonds will be crushed.

'Buy and Hold' Is Alive and Well

Your subject is foolish and naive.

"Buy and hold" was never heard of until the late 70's when the Wall Street Sharks got with the large corporations and discussed a new way to gain control of pension money in order to churjn and burn and otherwise bilk the unsuspecting little guy who had not the slightest idea how to manage his pension money.

Using the Ibbotsen and Sinquefeld study of the late 70's that found the"long term" return of the market to be close to 10%.

Armed with this piece of biased information--nobody was told at the time most of the returns were based on dividends--the corporations saw a way to get out of managing defined benefit plans,

Wall Street licked its lips, and they went and lobbied a bunch of stupid congressmen-[are there any other kind?] to pass laws defining IRA's and 401k's, sending innocent workers futures to the blood suckers. "Retire a millionaire" that was a big one I heard on a Wall Street firm's TV ad. Remember that one?

Thus "Buy and Hold" was born. If one buys and holds, how does one buy low and sell high? Money is made in the mid-term--and don't you all forget it. The wisdom of the old codgers is called Wisdom for one reason --IT WORKS--MOVE TO THE SIDELINES------

Does the U.S. Need China to Pull it Out of Recession?

Somebody is smoking something---Its rather hard to borrow your way to prosperity--havent we found that out yet?? The american consumer needs to pay off his debt, and then save money--then we have to rebuild some way to produce something to build wealth--financial engineering doesn't work--and the Chinese? They need to get out of dollars before they lose any more value and buy gold to help them float the Renminbi----that is what they are thinking and thats what they will probably do...

we on the other hand, are stuck with 280 trillion or so in dangerous derivatives that can take down what is left of our big banks....So we are in deep doo--doo. Nobody wants to talk about the $1.1 trillion in interest only and option mortgages held by thinly capitalized speculators who are upside down and cannot get any refinancing.----The resets start in May 2009 and run until late 2012. think what is going to happen to the derivatives 1.1 trillion in badloansareburied in when the mess we are in currently was caused by "only" 615 $billion going bad----gee--we are starting to talk about real money...

What i find scary is that the new administration is being packed with the very people who brought on the current destruction to our system and economy and who benefited from it.

US and Asian Markets Jump While Europe Stumbles

Geithner is just another Councilon Foreign Relations shill. My bet is on the PPT juicing the market and forcing shorts to cover as PR for their new Boy.
Obama is CFR, Corrigan is CFR, Summers is CFR, Rubin is CFR, Clinton is CFR, Biden is CFR, Bushes are CFR, Cheney is CFR, Kissinger is CFR,
JMP/Chase is CFR----Is their a trend here are am cross eyed??

U.S. Future Inflation Gauge Tumbles to 81-Month Low

How can things get better when people like Robert Rubin, Summers, and Geithner are still playing and now attached to the new administration.
They caused this mess! They lobbied for the repeal of the Glass-Steagall Act and then created the derivative mess aided by the support of fellow "secret society" member Alan Greenspan.
One thing even Greenspan knew is that Gold will outperform in "times of extremis." That means hyper inflation and/or deflation. Real Estate crash 2 begins in May of 2009 andruns till Dec 2012. $1.1 trillion more of interest only, option, and liar loans will reset and the failure rate will be twice as large as the 615 billion in subprime that started this mess. How can we make a decentliving and have descent investments when the greedy wealthy elite own the Government??