Subprime not the biggest problem - Noland on Financial Sense this week -

[Spartacus]

I've made this point several times before - many people have good credit only because they've never been distressed

How many of these took on much more expensive mortgages than they should have, lured in by the various programs?

If they get into trouble in substantial numbers (maybe in an upcoming recession) there's no telling how bad the situation could get.

The Noland interview - mostly review for most of us.

http://www.financialsense.com/fsn/main.html

[Rajiv]

Re: Subprime not the biggest problem - Noland on Financial Sense this week -

It can be heard here
Special Guest Doug Noland

[MEDIA]http://www.netcastdaily.com/broadcast/fsn2007-0825-2.mp3[/MEDIA]

[Rajiv]

Re: Subprime not the biggest problem - Noland on Financial Sense this week -

As someone said to me "the Earthquake was in subprimes. But the resulting Tsunami is everywhere!"

[Spartacus]

Re: Subprime not the biggest problem - Noland on Financial Sense this week -

Thanks.

I should learn to do that.

It can be heard here
Special Guest Doug Noland

http://www.netcastdaily.com/broadcas...007-0825-2.mp3

[Rajiv]

Re: Subprime not the biggest problem - Noland on Financial Sense this week -

Use the Big M in the tool bar and put the URL of the mp3 or other media file in there.

[Spartacus]

Re: Subprime not the biggest problem - Noland on Financial Sense this week -

As someone said to me "the Earthquake was in subprimes. But the resulting Tsunami is everywhere!"

Interesting metaphor - tsunamis become amplified as they go from deep to shallow water, I wonder where the lagoons become "shallow".

Specifically, are there communities where lots of people will get into trouble on their jumbo mortgages - the income they thought would carry a Jumbo mortgage is nowhere near as deep or stable as they thought ?

[Rajiv]

Re: Subprime not the biggest problem - Noland on Financial Sense this week -

I think the metaphor was meant more to imply that the liquidity crunch engendered by the inability to cash out the MBS cascaded down into an inability to meet other leveraged debt obligations and that inability to weather the wave may lead to a increasing pool of funds that are in trouble.

In other words, the "liquidity crunch" is the wave, and the "leveraging" is the amplification mechanism!

[zoog]

Re: Subprime not the biggest problem - Noland on Financial Sense this week -

Specifically, are there communities where lots of people will get into trouble on their jumbo mortgages - the income they thought would carry a Jumbo mortgage is nowhere near as deep or stable as they thought ?

Simply by volume, that would have to be any large city in California. An example:

About 73 percent of people who bought homes in Santa Clara County in the first half of this year used jumbo mortgages to finance their purchases. Bay Area-wide, 62 percent used such loans, according to DataQuick Information Systems.

[Guest]

Re: Subprime not the biggest problem - Noland on Financial Sense this week -

A very sobering interview indeed. Validates iTulip's ultra-cautious stance at this time.

[Guest]

Re: Subprime not the biggest problem - Noland on Financial Sense this week -

Don't let me cramp your style, fellas ... :p