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day permlink Tuesday, 14 August 2007

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Scott Burns @ AssetBuilder: The Nitwit Sector

Today, yet another wave of Nitwit Lending has put the entire financial system at hazard--- and the subprime mortgage mess is only part of the problem. The rising wave of adjustable mortgage rate resets is a larger problem.

As financial writer John Mauldin pointed out in a recent newsletter, resets scheduled for next February and March alone will be more than all the resets in the first 6 months of this year, $197 billion. Resets in the first six months of next year, $521 billion, will be greater than the entire year 2007.

Talk about moments of truth. That's when many owners will become renters and many lenders will become harried owner/sellers. Then, not now, is when the housing market should start to bottom. It's also when consumers will be tightest with their spending, so we're likely to see a weaker economy than we see today.

[snip] ... don't plan on being able to sell [your own house] quickly or easily, because these jokers can't be relied on to provide a steady and reasonable flow of financing. When their own foolishness comes back to bite them, they invariably make things worse by reducing lending, making a bad situation worse.

Watch them do it now. They will call it "prudence."


Some sites to follow this story on:

  • Linked before:

    • The Housing Bubble Blog - collects relevant articles every day from major news sites. (I think they just search for 'foreclosures' and quote everything with that keyword...)

    • CNBC's house blog Realty Check

  • Not linked before:

    • HousingPANIC - one of the many sites which are openly rooting for an economic crash to come out of all this.

      Because (they assert) not only do the lenders & speculators deserve it for trying to make ridiculous amounts of money in stupid ways, but the rest of us deserve the ill effects of a crash/extreme credit crunch because.. we're all ignorant sheep who should have demanded more lender-regulation sooner, or something. It doesn't follow to me, but there you are.

      If you can get past that bias, they pick up lots of the news articles that don't make it to the front page.

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