SharonW

First Call of a Double-Dip Recession: Setting Up a Market Bottom?

Crocodilian,

YES! Yours is the first remark I've seen yet characterizing the new age of investing (I'm stretching, I realize, you were appropriating that to all opinion, but it still applies) as "velocity of opinion." I have been pondering something similiar myself. However, I'd venture that that is only the half of it.

The brokers and analysts have nothing now to offer given the more leveled playing field offered to the common man/woman with volumes of information at their fingertips. So not only are we of the age of "velocity of opinion," but "volume*velocity of information."

In fact, the analysts now seem to be behind the news. One may look no further than the latest downgrades to already beaten up shares of stock. They're almost comical in their late nature. Whereas the active investor has all the time he wishes to devote to seek out new sources and opinions on his particular interests.

On the other hand, I couldn't understand for the longest time how people in supposed authority did NOT know this was coming. It seemed like all at once people got a clue whereas I expected a longer ongoing decline in 2008, and instead it was as if the toilet got flushed all at once. I think I blame the bottom-callers.

Every time we reach a trench, there's a collective that pops out saying a bottom is in. Generally speaking, I'd call that a "Mission Accomplished" call. :)

I, for one, because of personal history, i.e. being sentient through the 80's and 90's knew damn well the real estate market was going to explode, but hadn't a clue as to the new and ridiculous mortgage products utilized in creating it until I started looking into it about a year and a half ago. And even then it seemed I knew more than the "professionals" by doing so. In fact, it still does.

How can anyone be calling a bottom in the real estate market by mid 2009 if they really knew ANYTHING about the hybrid toxic loans? Therefore, how can anyone call a bottom to the market when the financials haven't bottomed because of all this toxic crap on their books? Fingernails meet ledge edge...that's all we've got.



On Jan 02 03:19 PM Crocodilian wrote:

> Very creative use of Google to measure zeitgeist, but this mode of
> analysis has the potential for rapid feedback distortions. That is:
> Have you considered that your contrarian schema may itself propagate?
> The "velocity of opinion" has increased dramatically in the Twitter
> age.
>
> Also, do you have any idea what accounts for the dramatic periodicity
> in your Google data? Your chart shows a huge annual cycle, with troughs
> in the summer months. Is this raw search volume? If so, you should
> really normalize against overall search volumes (eg, what percentage
> of searches are for "Great Depression", as opposed to the nominal
> search numbers).

First Call of a Double-Dip Recession: Setting Up a Market Bottom?

DougM,

Have a gander at Fitch's report "Option ARMs: It's Later Than It Seems."

Cute clauses in option ARM's that put them into hard resets EARLIER than their 5-year timeline. Primarily, paying the minimum monthly payment which the majority have done versus interest only or interest plus principal. The clause? Their principal cannot increase to more than 110-115%. Read up, dude. This is scary crap.

www.totalsecuritizatio...

I've seen redrawn charts of how this is unfolding at Reggie Middleton's site. He shows how the recasts are now unfolding, it's like the 3rd or so chart down. Less peaky, but earlier and more extended without the breather from the subprimes:

boombustblog.com/index...

No need for anyone to get all catchy-phrasey with "double bottom" memes. We're not really coming up for air any time soon.






On Jan 03 05:38 PM DougM wrote:

> Fitz919, as another poster has indicated, I believe you're referring
> to the Credit Suisse ARM reset chart, circa early 2007. A tidal wave
> of toxic "pick-a-payment&am... option-ARMs and "liar's loan" Alt-A
> loans are due to reset in 2009 and 2010. That housing bubble is a
> gift that just keeps on giving.
>
> That said, the chart was prepared almost 2 years ago. We don't know
> how many of those mortgages have been refied or have already defaulted.
> We also don't know (but can suspect) that the government's efforts
> to push fixed mortgage rates to artificially low levels will be successful
> in the short term and that many of these loans will somehow be rolled
> (despite negative equity) into fixed rate loans before the lid pops
> off the inflationary bubble the government's creating.