If you think the “Mother of all recessions” isn’t coming

[Nancy_s soothsayer]

Collectively, we should all pretend everything is okay, keep going to the safety of our secure jobs, let the government do its job of regulating the markets, let somebody in authority do his job of keeping everyone toe the line, and we keep spending for the economy. Individually, however (including the ones in government), we all say “It’s not my problem.” There’s your solution, ostrich!

[SD Realtor]

“Collectively, we should all pretend everything is okay, keep going to the safety of our secure jobs, let the government do its job of regulating the markets, let somebody in authority do his job of keeping everyone toe the line, and we keep spending for the economy. Individually, however (including the ones in government), we all say “It’s not my problem.” There’s your solution, ostrich!”

Okay so that is a helpful post.

What is your recommendation that we should all do?

SD Realtor

[SD Realtor]

“Collectively, we should all pretend everything is okay, keep going to the safety of our secure jobs, let the government do its job of regulating the markets, let somebody in authority do his job of keeping everyone toe the line, and we keep spending for the economy. Individually, however (including the ones in government), we all say “It’s not my problem.” There’s your solution, ostrich!”

Okay so that is a helpful post.

What is your recommendation that we should all do?

SD Realtor

[SD Realtor]

“Collectively, we should all pretend everything is okay, keep going to the safety of our secure jobs, let the government do its job of regulating the markets, let somebody in authority do his job of keeping everyone toe the line, and we keep spending for the economy. Individually, however (including the ones in government), we all say “It’s not my problem.” There’s your solution, ostrich!”

Okay so that is a helpful post.

What is your recommendation that we should all do?

SD Realtor

[SD Realtor]

“Collectively, we should all pretend everything is okay, keep going to the safety of our secure jobs, let the government do its job of regulating the markets, let somebody in authority do his job of keeping everyone toe the line, and we keep spending for the economy. Individually, however (including the ones in government), we all say “It’s not my problem.” There’s your solution, ostrich!”

Okay so that is a helpful post.

What is your recommendation that we should all do?

SD Realtor

[SD Realtor]

“Collectively, we should all pretend everything is okay, keep going to the safety of our secure jobs, let the government do its job of regulating the markets, let somebody in authority do his job of keeping everyone toe the line, and we keep spending for the economy. Individually, however (including the ones in government), we all say “It’s not my problem.” There’s your solution, ostrich!”

Okay so that is a helpful post.

What is your recommendation that we should all do?

SD Realtor

[rocket science]

OK so this in and of itself provides any new or concrete evidence that the "mother of all recessions" is coming.

So lets move on to the next piece of the puzzle.

Is this a sign of another shoe to drop?

 

http://www.latimes.com/news/local/la-fi-autoloans30dec30,1,2767577.story?ctrack=1&cset=true

 

My favorite part…

 "The job of a successful dealer is to find a funding package that's acceptable to the customer," said Paul Taylor, chief economist of the National Automobile Dealers Assn. "These loans allow them to get a luxury car rather than a more modestly priced vehicle." 

Just like in the housing bubble!!!!

rs

[rocket science]

OK so this in and of itself provides any new or concrete evidence that the "mother of all recessions" is coming.

So lets move on to the next piece of the puzzle.

Is this a sign of another shoe to drop?

 

http://www.latimes.com/news/local/la-fi-autoloans30dec30,1,2767577.story?ctrack=1&cset=true

 

My favorite part…

 "The job of a successful dealer is to find a funding package that's acceptable to the customer," said Paul Taylor, chief economist of the National Automobile Dealers Assn. "These loans allow them to get a luxury car rather than a more modestly priced vehicle." 

Just like in the housing bubble!!!!

rs

[rocket science]

OK so this in and of itself provides any new or concrete evidence that the "mother of all recessions" is coming.

So lets move on to the next piece of the puzzle.

Is this a sign of another shoe to drop?

 

http://www.latimes.com/news/local/la-fi-autoloans30dec30,1,2767577.story?ctrack=1&cset=true

 

My favorite part…

 "The job of a successful dealer is to find a funding package that's acceptable to the customer," said Paul Taylor, chief economist of the National Automobile Dealers Assn. "These loans allow them to get a luxury car rather than a more modestly priced vehicle." 

Just like in the housing bubble!!!!

rs

[rocket science]

OK so this in and of itself provides any new or concrete evidence that the "mother of all recessions" is coming.

So lets move on to the next piece of the puzzle.

Is this a sign of another shoe to drop?

 

http://www.latimes.com/news/local/la-fi-autoloans30dec30,1,2767577.story?ctrack=1&cset=true

 

My favorite part…

 "The job of a successful dealer is to find a funding package that's acceptable to the customer," said Paul Taylor, chief economist of the National Automobile Dealers Assn. "These loans allow them to get a luxury car rather than a more modestly priced vehicle." 

Just like in the housing bubble!!!!

rs

[rocket science]

OK so this in and of itself provides any new or concrete evidence that the "mother of all recessions" is coming.

So lets move on to the next piece of the puzzle.

Is this a sign of another shoe to drop?

 

http://www.latimes.com/news/local/la-fi-autoloans30dec30,1,2767577.story?ctrack=1&cset=true

 

My favorite part…

 "The job of a successful dealer is to find a funding package that's acceptable to the customer," said Paul Taylor, chief economist of the National Automobile Dealers Assn. "These loans allow them to get a luxury car rather than a more modestly priced vehicle." 

Just like in the housing bubble!!!!

rs

[Raybyrnes]

Top Value Manager Even Gloomier on 2008

Wary of subprime mess, FPA’s Rodriguez halts stock, bond purchases.

Just when you thought Bob Rodriguez couldn’t get any gloomier, the highly regarded value investor has become even more downbeat.

Rodriguez, the hugely successful manager of fpa capital and new income

Rodriguez’s move is virtually unprecedented. Many investors, including Rodriguez himself, aren’t shy retreating to cash when they’re nervous. But few money managers have ever publicly foresworn stocks and bonds altogether.

The Los Angeles-based fund manager has been pessimistic for a while. Citing an absence of attractive values, Rodriguez has long held enormous cash stakes at both of his funds. For instance, cash currently accounts for a whopping 40% of stock fund FPA Capital’s portfolio. And in 2003, Rodriguez declared a “buyer’s strike” at fixed-income FPA New Income, stating that high-quality bonds had little or no investment merit. He’s since loosened his stance a bit, adding short-term government bonds to his portfolio in 2006, but given his concerns over the fiscal health of the U.S. government and fears of higher inflation, he continues to stay away from longer-term bonds.

Rodriguez began sounding alarm bells over loose lending practices in the mortgage arena in 2005. He began to notice that his holdings tied to so-called “Alt-A” mortgages, loans to homebuyers with high credit scores but undocumented incomes, had begun to suffer increasing defaults, leading him to eliminate his bond portfolio’s exposure to such investments. More recently, he questioned whether rating agencies had wrongly given risky mortgage-backed bonds high credit ratings. In his June 2007 report to New Income shareholders and in a panel discussion at Morningstar’s annual investment conference in June, he said that rating agencies hadn’t accounted for the risk of falling home prices in their models. With significant declines in housing prices, Rodriguez argued, even top-rated AA and AAA bonds would run into trouble.
Since then, Rodriguez’s outlook has deteriorated further. He points to etrade’s

ETFC
) recent sale of its mortgage securities portfolio at only 20% of its original face value as an ominous sign. Rodriguez believes other similar transactions are in the offing, leading to more huge write-offs at other financial firms as they’re forced to value their own holdings at fire-sale prices. He anticipates the impact will be felt in early 2008 as companies announce the big write-downs when they release year-end earnings. The losses would force financial institutions to shore up their balance sheets, further restricting lenders’ ability to extend credit and spur economic growth. The credit crunch could spread beyond mortgages to other asset-backed securities and the fixed-income market as a whole.

As a result, Rodriguez’s prognosis for the economy in 2008 is grim. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.

Rodridguez certainly isn’t alone in his prediction, though others envision a less-severe downturn. For instance, top bond investor Bill Gross, the manager of $112 billion

[Raybyrnes]

Top Value Manager Even Gloomier on 2008

Wary of subprime mess, FPA’s Rodriguez halts stock, bond purchases.

Just when you thought Bob Rodriguez couldn’t get any gloomier, the highly regarded value investor has become even more downbeat.

Rodriguez, the hugely successful manager of fpa capital and new income

Rodriguez’s move is virtually unprecedented. Many investors, including Rodriguez himself, aren’t shy retreating to cash when they’re nervous. But few money managers have ever publicly foresworn stocks and bonds altogether.

The Los Angeles-based fund manager has been pessimistic for a while. Citing an absence of attractive values, Rodriguez has long held enormous cash stakes at both of his funds. For instance, cash currently accounts for a whopping 40% of stock fund FPA Capital’s portfolio. And in 2003, Rodriguez declared a “buyer’s strike” at fixed-income FPA New Income, stating that high-quality bonds had little or no investment merit. He’s since loosened his stance a bit, adding short-term government bonds to his portfolio in 2006, but given his concerns over the fiscal health of the U.S. government and fears of higher inflation, he continues to stay away from longer-term bonds.

Rodriguez began sounding alarm bells over loose lending practices in the mortgage arena in 2005. He began to notice that his holdings tied to so-called “Alt-A” mortgages, loans to homebuyers with high credit scores but undocumented incomes, had begun to suffer increasing defaults, leading him to eliminate his bond portfolio’s exposure to such investments. More recently, he questioned whether rating agencies had wrongly given risky mortgage-backed bonds high credit ratings. In his June 2007 report to New Income shareholders and in a panel discussion at Morningstar’s annual investment conference in June, he said that rating agencies hadn’t accounted for the risk of falling home prices in their models. With significant declines in housing prices, Rodriguez argued, even top-rated AA and AAA bonds would run into trouble.
Since then, Rodriguez’s outlook has deteriorated further. He points to etrade’s

ETFC
) recent sale of its mortgage securities portfolio at only 20% of its original face value as an ominous sign. Rodriguez believes other similar transactions are in the offing, leading to more huge write-offs at other financial firms as they’re forced to value their own holdings at fire-sale prices. He anticipates the impact will be felt in early 2008 as companies announce the big write-downs when they release year-end earnings. The losses would force financial institutions to shore up their balance sheets, further restricting lenders’ ability to extend credit and spur economic growth. The credit crunch could spread beyond mortgages to other asset-backed securities and the fixed-income market as a whole.

As a result, Rodriguez’s prognosis for the economy in 2008 is grim. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.

Rodridguez certainly isn’t alone in his prediction, though others envision a less-severe downturn. For instance, top bond investor Bill Gross, the manager of $112 billion

[Raybyrnes]

Top Value Manager Even Gloomier on 2008

Wary of subprime mess, FPA’s Rodriguez halts stock, bond purchases.

Just when you thought Bob Rodriguez couldn’t get any gloomier, the highly regarded value investor has become even more downbeat.

Rodriguez, the hugely successful manager of fpa capital and new income

Rodriguez’s move is virtually unprecedented. Many investors, including Rodriguez himself, aren’t shy retreating to cash when they’re nervous. But few money managers have ever publicly foresworn stocks and bonds altogether.

The Los Angeles-based fund manager has been pessimistic for a while. Citing an absence of attractive values, Rodriguez has long held enormous cash stakes at both of his funds. For instance, cash currently accounts for a whopping 40% of stock fund FPA Capital’s portfolio. And in 2003, Rodriguez declared a “buyer’s strike” at fixed-income FPA New Income, stating that high-quality bonds had little or no investment merit. He’s since loosened his stance a bit, adding short-term government bonds to his portfolio in 2006, but given his concerns over the fiscal health of the U.S. government and fears of higher inflation, he continues to stay away from longer-term bonds.

Rodriguez began sounding alarm bells over loose lending practices in the mortgage arena in 2005. He began to notice that his holdings tied to so-called “Alt-A” mortgages, loans to homebuyers with high credit scores but undocumented incomes, had begun to suffer increasing defaults, leading him to eliminate his bond portfolio’s exposure to such investments. More recently, he questioned whether rating agencies had wrongly given risky mortgage-backed bonds high credit ratings. In his June 2007 report to New Income shareholders and in a panel discussion at Morningstar’s annual investment conference in June, he said that rating agencies hadn’t accounted for the risk of falling home prices in their models. With significant declines in housing prices, Rodriguez argued, even top-rated AA and AAA bonds would run into trouble.
Since then, Rodriguez’s outlook has deteriorated further. He points to etrade’s

ETFC
) recent sale of its mortgage securities portfolio at only 20% of its original face value as an ominous sign. Rodriguez believes other similar transactions are in the offing, leading to more huge write-offs at other financial firms as they’re forced to value their own holdings at fire-sale prices. He anticipates the impact will be felt in early 2008 as companies announce the big write-downs when they release year-end earnings. The losses would force financial institutions to shore up their balance sheets, further restricting lenders’ ability to extend credit and spur economic growth. The credit crunch could spread beyond mortgages to other asset-backed securities and the fixed-income market as a whole.

As a result, Rodriguez’s prognosis for the economy in 2008 is grim. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.

Rodridguez certainly isn’t alone in his prediction, though others envision a less-severe downturn. For instance, top bond investor Bill Gross, the manager of $112 billion

[Raybyrnes]

Top Value Manager Even Gloomier on 2008

Wary of subprime mess, FPA’s Rodriguez halts stock, bond purchases.

Just when you thought Bob Rodriguez couldn’t get any gloomier, the highly regarded value investor has become even more downbeat.

Rodriguez, the hugely successful manager of fpa capital and new income

Rodriguez’s move is virtually unprecedented. Many investors, including Rodriguez himself, aren’t shy retreating to cash when they’re nervous. But few money managers have ever publicly foresworn stocks and bonds altogether.

The Los Angeles-based fund manager has been pessimistic for a while. Citing an absence of attractive values, Rodriguez has long held enormous cash stakes at both of his funds. For instance, cash currently accounts for a whopping 40% of stock fund FPA Capital’s portfolio. And in 2003, Rodriguez declared a “buyer’s strike” at fixed-income FPA New Income, stating that high-quality bonds had little or no investment merit. He’s since loosened his stance a bit, adding short-term government bonds to his portfolio in 2006, but given his concerns over the fiscal health of the U.S. government and fears of higher inflation, he continues to stay away from longer-term bonds.

Rodriguez began sounding alarm bells over loose lending practices in the mortgage arena in 2005. He began to notice that his holdings tied to so-called “Alt-A” mortgages, loans to homebuyers with high credit scores but undocumented incomes, had begun to suffer increasing defaults, leading him to eliminate his bond portfolio’s exposure to such investments. More recently, he questioned whether rating agencies had wrongly given risky mortgage-backed bonds high credit ratings. In his June 2007 report to New Income shareholders and in a panel discussion at Morningstar’s annual investment conference in June, he said that rating agencies hadn’t accounted for the risk of falling home prices in their models. With significant declines in housing prices, Rodriguez argued, even top-rated AA and AAA bonds would run into trouble.
Since then, Rodriguez’s outlook has deteriorated further. He points to etrade’s

ETFC
) recent sale of its mortgage securities portfolio at only 20% of its original face value as an ominous sign. Rodriguez believes other similar transactions are in the offing, leading to more huge write-offs at other financial firms as they’re forced to value their own holdings at fire-sale prices. He anticipates the impact will be felt in early 2008 as companies announce the big write-downs when they release year-end earnings. The losses would force financial institutions to shore up their balance sheets, further restricting lenders’ ability to extend credit and spur economic growth. The credit crunch could spread beyond mortgages to other asset-backed securities and the fixed-income market as a whole.

As a result, Rodriguez’s prognosis for the economy in 2008 is grim. In his September 2007 letter to FPA Capital shareholders, he wrote that the odds of a recession were 50% or greater. But in a conversation with Morningstar, he noted that as recently as a month ago, he would have placed the odds at 70%. Now he says the odds are closer to 100%.

Rodridguez certainly isn’t alone in his prediction, though others envision a less-severe downturn. For instance, top bond investor Bill Gross, the manager of $112 billion

[Author]

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