AK: At some point, the lenders will have to come clean regarding their portfolio of non- and sub-perfoming assets, and then the bottom will really fall out.
At present, all of the major players involved, whether banks (Citi), investment banks (Bear, Merrill) or lenders (Countrywide) have done a really good job of hiding their off book investment exposures (SIVs, CDOs, CDSs, etc) from view. The potential catastrophic losses these investments might suffer is the reason that the government and the FED are scrambling right now to inject liquidity into the market, create bailout programs for both homeowners and banks/lenders and employing interest rate cuts in hope of stimulating the market.
It is simply delaying the inevitable. The inevitable being that this entire rotten house of cards collapses. And then you’re gonna see some real price drops!
