Posts filed under “Credit”

Housing Charts: Genesis of a Crisis

Front page WSJ article today makes for intriguing reading: U.S. Mortgage Crisis Rivals S&L Meltdown

For those of you w/o access, check out the informative  collection of charts at WSJ.com (public) on:   Home Ownership, House Price-to-Rental Ratio, Commercial Paper, Prices of Subprime Mortgage Tranches.

As this chart reveals, starting in late 2001, the price ratio of renting vs. buying broke out of a multi-decade range. Cheap money, and an apparent lack of lending standards put millions of renters into houses that, based on today’s foreclosure levels, they could not service (i.e., afford).

Hence, the massive unwind as these home owners return to renting status . . .

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HOUSE PRICE-TO-RENTAL RATIO:   
Ratio of OFHEO house price index to personal consumption expenditures on rent

Infocrisis1207ownership

Fascinating stuff . . .

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Source:
U.S. Mortgage Crisis Rivals S&L Meltdown   
GREG IP , MARK WHITEHOUSE  and AARON LUCCHETTI
December 10, 2007; Page A1
http://online.wsj.com/article/SB119724657737318810.html

Category: Credit, Derivatives, Finance, Real Estate

SubPrime? So what?

I have long respected and enjoyed Jim Cramer, but jeez, could he have possibly been any more wrong than this?  Its one thing to be wrong about the future, but how about getting the present correct?

So Subprime Blows Up; So What, Says Cramer (Jim gives you the scoop on why the $500 billion market is no threat to
the market, even if it fully collapses. Added: July 16, 2007)

Geez, that makes 6,800 look good.

via ZackAttack (here)

Category: Credit, Derivatives, Video

More Trouble for Mortgage Securitizers?

Category: Credit, Real Estate, Taxes and Policy

Treasury Plan to Freeze Mortgage Rates

Category: Credit, Derivatives, Economy, Psychology, Real Estate, Taxes and Policy

Underwriting the SubPrime Crisis

Category: Credit, Derivatives, Finance

You ARE Your FICO Score

Category: Credit, Data Analysis, Real Estate

Quote of the Day

Category: Commodities, Credit, Economy

Rally Continues on Bernanke Comments

Category: Credit, Economy, Federal Reserve, Inflation, Psychology

Combined Value of Leading Credit Sources

Category: Credit, Derivatives, Finance, Financial Press, Technical Analysis

Inflation? What Inflation?

A tale of two headlines:

Inflation Fears Hit Eurozone

          and

Goldman Sees Funds Rate Cut to 3%

Won’t someone please explain this to me?

How is it possible that the regions of the world with strong currencies — like Europe, U.K., Australia, and Canada — are having inflation problems. And yet at the same time, the nation having a record low currency — i.e., the United States and our Dollar — doesn’t seem to either inflationary pressures (At least according to official CPI data). And we seem to have little concern about further currency induced price increases.

Am I the only person who finds this incongruent?

If Goldman Sachs is correct, and the Fed does eventually cut rates to 3% — what might that mean for various dollar priced commodities like Oil & Gold?

Probably very little — if (and this is a big IF) we are in the throes of a recession. But what if the Bulls are right, and this is merely a mild mid cycle correction?

A 3% Fed rate could mean Oil at $150 and Gold at $1200.

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Excerpts after the jump . . .


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Sources:

Inflation fears hit eurozone

By Ralph Atkins in Frankfurt and Krishna Guha in Washington
FT, November 27 2007 18:02

http://www.ft.com/cms/s/0/55ff8ca6-9d10-11dc-af03-0000779fd2ac.html

Goldman Sees Funds Rate Cut to 3%
Greg Ip
WSJ, November 27, 2007, 9:26 am
http://blogs.wsj.com/economics/2007/11/27/goldman-sees-funds-rate-cut-to-3/

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Category: Commodities, Credit, Derivatives, Economy, Energy, Inflation