Mortgage Swamp

[lethal]

Re: Mortgage Swamp

bill, Fred, c1ue, all good info, thanks. So a recession starting late this year, that gets progressively worse as defaults grow and hedge funds stumble and everything keeps building upon itself.

There's still talk out there that the stock market tends to do well in election years. Could that still be a possibility in the midst of such a recession?

My personal take on this has been to expect a relatively mild recession late this year, followed by a weak recovery next year, then followed by a serious crash say 2009 or so. But I'm just an armchair economist, so I trust iTulip analysis and forecasts more than my own.

The 'Powers that Be' are going to resist this sequence of events, adjusting the figures (Inflation, Employment, etc) and priming the economy for as long as humanly possible.

My understanding is that with the 2008 Elections, the government and the President go into caretaker mode.

Q: Will this impact their ability to 'manipulate' the economy?

If so, will all of the manipulation and deception stop?

With the amount of pressure built up underneath the deception, how long will it take to reflect in the economy (explode)?

Q: Will the US support the Dollar at current levels?

[bill]

Re: Mortgage Swamp

Video: US Home prices adjusted for inflation plotted as a roller coaster:

http://video.google.com/videoplay?do...arch&plindex=0

[Rajiv]

Re: Mortgage Swamp

Scary video!!

The relevant graph is here, and very educational



and the projected bust

[bill]

Re: Mortgage Swamp

Please China we are begging you to buy more Mortgage Securities.

http://www.bloomberg.com/apps/news?p...sDw&refer=asia

July 13 (Bloomberg) -- The U.S. is urging China's central bank to buy more mortgage-backed securities after a surge in defaults by risky borrowers in the world's largest economy eroded demand for such instruments.

[bill]

Re: Mortgage Swamp

http://www.lvrj.com/business/8516877.html

Real estate consultant John Burns said home prices in Las Vegas need to drop by 33 percent, or about $100,000, before the market returns to normal conditions. He shows the housing cost-to-income ratio at 50 percent, meaning people spend half their income on housing. Reno is the same.
The national average is around 30 percent.

Information on housing:http://housingdoom.com/

[Rajiv]

Re: Mortgage Swamp

Good article "Foreclosures Up 90% From Last Year - Winners and Losers in the Housing Market Crash"

In a quarterly conference call yesterday reported by The New York Times, JP Morgan CEO Jamie Dimon referred to the current business climate as "a relatively benign point in the credit cycle."

The market judged the company differently, sending share prices 3 percent lower by the end of the trading day.

Market jitters and JP Morgan's comments are relative to the subprime mortgage meltdown.

In recent weeks, Wall Street's biggest players have all stuck to the same pitch: that the subprime mortgage mess is "contained".

It is about as contained as inflation. You remember inflation? That's the index that omits food and energy prices because American consumers don't drive cars or eat.

Who would omit the price of food or energy from a core index? Clearly, someone or ones who want Americans to believe the cost of living is nothing compared to the benefits of democracy.

That's how the meaningful is turned to meaning-less.

Along the same lines, today Federal Reserve Chair Ben Bernanke told Congress in his mid-year economic report that he thought "the demand for housing would stabilize "soon".

Understand, though, that the charade that passes for current thinking on the economy in Senate or House subcommittee hearings is stage-managed by well-educated and well-compensated types who know perfectly well how poorly the broad stock market indexes have performed in relation to inflation.

And they read the papers and the blogs: consumer confidence is down, homebuilders confidence is plummeting, and public corporations, like Pulte Homes in yesterday's announcement, are hemorraging value.

Behind closed doors, including the doors of the Federal Reserve, one must infer that the dialogue is of a substantially different character. These knife-blade conversations do not show up in print.

[goprisko]

Re: Mortgage Swamp

Dear Fred:

Thank you very much for a detailed and cogent analysis.

However................

One important thing seems to be missing..............

This isn't just any old 10 year period in which to experience a bear market
in housing, no sir !

This is the period in which the baby boomer generation retires......

Demographically, this generation will want to downsize their homes, sell them to buy yachts, or condos in St. Maarten, or burial plots...

I remember reading elsewhere.... in a galaxy long ago..... and far, far, away....

THAT...

The boomer retirement demographics alone.... were sufficient to create a housing recession..........

Your view??????

INDY

[FRED]

Re: Mortgage Swamp

Dear Fred:

Thank you very much for a detailed and cogent analysis.

However................

One important thing seems to be missing..............

This isn't just any old 10 year period in which to experience a bear market
in housing, no sir !

This is the period in which the baby boomer generation retires......

Demographically, this generation will want to downsize their homes, sell them to buy yachts, or condos in St. Maarten, or burial plots...

I remember reading elsewhere.... in a galaxy long ago..... and far, far, away....

THAT...

The boomer retirement demographics alone.... were sufficient to create a housing recession..........

Your view??????

INDY

Several factors are working against single family suburban homes:

1) Rising energy and commuting costs will push down the prices of homes located more than 30 min. from regional job centers
2) Aging demographics is causing a migration north to south
3) Aging demographics will cause a shift out of homes and into condos near or in cities

One mitigating factor is the work-at-home trend that will reduce the frequency and cost of commuting.

[DemonD]

Re: Mortgage Swamp

Hey Fred (or other itulip staff), I have yet to run across a good analysis on the "work-at-home" crowd and how it will affect the economy. This hits semi-personally as my significant other is looking to transition into a more home-based business type way of generating money.

[goprisko]

Re: Mortgage Swamp

Does anyone really think the Chinese Central Bankers will buy Mortgage
Backed Securities?

Aren't they actually dumping them? Assuming they had them in the first place...

INDY