For what it’s worth this is K Denninger’s take at market-ticker;
“The market has not yet gotten its arms around the Moody’s announcement on the securitization credit rating process as I outlined in the ticker the other night. It will. When? I can’t tell you that, but what I can tell you with certainty is that the squeeze in the mortgage marketplace will get much worse, will implode more lenders and will materially impact all of them.
The warning on this was when S&P said they were re-jiggering their models for mortgage ABS issues. But – they didn’t put any hair on that dog. Moody’s did, however, and then turned it rabid and let it loose.
Ignore this at your peril if you are long the market.
As I have said repeatedly – 30% of the demand that exists now in the housing market is going to be flushed as the ALT-A and Subprime pipeline is either shut down entirely or repriced to near credit-card rates. This IS happening – right now – and it WILL drag the economy into a recession. This will not end until there is a serious price contraction in housing prices so that affordability returns to historical norms.
Now go back and read that again guys. And then again. And then again.”
