via NYT
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Source:
Once Trusted Mortgage Pioneers, Now Pariahs
MICHAEL MOSS and GERALDINE FABRIKANT
NYT, December 24, 2008
http://www.nytimes.com/2008/12/25/business/25sandler.html
The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. ~Jesse Livermore
Without getting into a discussion on healthcare and its politics, one reality of our soon to be new system is the inevitable further rise in government spending that is headed to 25% of US GDP from its long term average of about 20%. In order to finance this, there will be a smaller private sector and as a result, there will be slower economic growth as nothing is for free. Should the average P/E ratio over the past 100 years of 15x still apply going forward or should there be a revaluation of the multiple paid for US corporate earnings?...
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December 25th, 2008 at 11:38 am
These are really going to blow up nicely.
December 25th, 2008 at 6:22 pm
From what I understand, these mortgages were designed to appeal to people “flipping” houses in a hot market. They were never really intended for traditional homeowners. Now that the hottest markets are stuck in an ice age, these mortgages are doomed to fail, but I’m not sure how much sympathy to feel for most of option ARM homeowners caught playing land baron.