Standard & Poor’s just drove a huge harpoon into the heart of the mortgage credit bubble,

[JWM in SD]

“Housing is “a slow-moving train wreck,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York. But “it just doesn’t seem at this point that it’s spilling over” into the rest of the economy.”

Yeah, those GMCs, Expeditions, Impalas and 500s and just flying off the lot……..

[JWM in SD]

“Housing is “a slow-moving train wreck,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York. But “it just doesn’t seem at this point that it’s spilling over” into the rest of the economy.”

Yeah, those GMCs, Expeditions, Impalas and 500s and just flying off the lot……..

[lniles]

Deutche Bank’s comments really puzzle me. What they call a slow-moving train wreck I call a rollercoaster creaking up to the first big drop-off. I liked hawk’s link to

http://www.nypost.com/seven/07112007/business/roof_caves_in_business_paul_tharp_and_roddy_boyd.htm
“July 11, 2007 — Wall Street is bracing for a nearly $2 trillion washout over the collapse of hollow and shaky mortgage bonds, triggering fears of a recession worse than the dot-com bubble bursting.”

(of course I liked it, it supported my opinion heh heh)

[lniles]

Deutche Bank’s comments really puzzle me. What they call a slow-moving train wreck I call a rollercoaster creaking up to the first big drop-off. I liked hawk’s link to

http://www.nypost.com/seven/07112007/business/roof_caves_in_business_paul_tharp_and_roddy_boyd.htm
“July 11, 2007 — Wall Street is bracing for a nearly $2 trillion washout over the collapse of hollow and shaky mortgage bonds, triggering fears of a recession worse than the dot-com bubble bursting.”

(of course I liked it, it supported my opinion heh heh)

[LA_Renter]

rb_engineer, One of the things to take into consideration in regards to market performance is that yes the S&P is up about 10% but our poor US Dollar broke 81 this week. We are sitting at a 30 yr low. In that context the S&P isn’t performing that well. In fact a potential bigger story stemming from the subprime debacle is the dollar index breaking through its 80 support level, that has been the floor for over three decades now. If we break through that level we are in totally unchartered territory. That would be bad, very very bad. You think the price of oil is high now?? Also something to pay attention to is the Yen firming against the dollar which helps unwind that carry trade (less liquidity). Personally I don’t want to see these things happen (I would like to see the housing market correct and thats it), and I think we will weather this but we are in somewhat of a precarious situation here. Just looking at the performance of the Dow and S&P isn’t telling the whole story here IMHO. I didn’t mean to add to the gloom here but what the hay.

[LA_Renter]

rb_engineer, One of the things to take into consideration in regards to market performance is that yes the S&P is up about 10% but our poor US Dollar broke 81 this week. We are sitting at a 30 yr low. In that context the S&P isn’t performing that well. In fact a potential bigger story stemming from the subprime debacle is the dollar index breaking through its 80 support level, that has been the floor for over three decades now. If we break through that level we are in totally unchartered territory. That would be bad, very very bad. You think the price of oil is high now?? Also something to pay attention to is the Yen firming against the dollar which helps unwind that carry trade (less liquidity). Personally I don’t want to see these things happen (I would like to see the housing market correct and thats it), and I think we will weather this but we are in somewhat of a precarious situation here. Just looking at the performance of the Dow and S&P isn’t telling the whole story here IMHO. I didn’t mean to add to the gloom here but what the hay.

[stansd]

Can anyone help with how we can see this credit contraction in terms of hard data? Ratings cuts don’t mean anything until they (inevitably) manifest themselves in higher interest rates or more loan application rejections.

Any thoughts out there on what metrics we can follow to see this occur? Is there a subprime interest rate index that we could track the progress of? Is Subprime mortgage origination dollars the appropriate metric, and if so, where can one find a monthly report on that?

I agree with everyone here that the downgrades are a very big deal-not in and of themselves, but because of the secondary and tertiary effects…on that note, amazing how quickly S&P, Moody’s, and Fitch jumped on this when the publicity about the magnitude of the coming debacle started to hit the major news agencies (look at the increasing familiarity of the news agencies writing articles linked on patrick.net over the last month). I can see this as nothing more than a johnny come lately attempt to save their asses from the huge string of lawsuits that will invevitably be coming their way in the next 3 years.

Stan

[stansd]

Can anyone help with how we can see this credit contraction in terms of hard data? Ratings cuts don’t mean anything until they (inevitably) manifest themselves in higher interest rates or more loan application rejections.

Any thoughts out there on what metrics we can follow to see this occur? Is there a subprime interest rate index that we could track the progress of? Is Subprime mortgage origination dollars the appropriate metric, and if so, where can one find a monthly report on that?

I agree with everyone here that the downgrades are a very big deal-not in and of themselves, but because of the secondary and tertiary effects…on that note, amazing how quickly S&P, Moody’s, and Fitch jumped on this when the publicity about the magnitude of the coming debacle started to hit the major news agencies (look at the increasing familiarity of the news agencies writing articles linked on patrick.net over the last month). I can see this as nothing more than a johnny come lately attempt to save their asses from the huge string of lawsuits that will invevitably be coming their way in the next 3 years.

Stan

[Steve Beebo]

I guess the Mensa-member analysts at Moody’s, S&P, and Fitch have just now figured out that when you make 100% loans to people with crappy credit, especially in areas with over-heated real estate markets, they just may not pay the money back if their home price drops by 1% or more.

Also, it seems like Deutsche Bank is the new owner of about 1/3 of all new bank REOs I see. I don’t know if they are the actual owners of the loans, or whether they’re just the trustee.

[Steve Beebo]

I guess the Mensa-member analysts at Moody’s, S&P, and Fitch have just now figured out that when you make 100% loans to people with crappy credit, especially in areas with over-heated real estate markets, they just may not pay the money back if their home price drops by 1% or more.

Also, it seems like Deutsche Bank is the new owner of about 1/3 of all new bank REOs I see. I don’t know if they are the actual owners of the loans, or whether they’re just the trustee.

[Nancy_s soothsayer]

Yes, yes… The Mensa-member slick grey suits with MBA’s and PHD’s employed at those pimp jobs at Moody’s, S&P, and Fitch must have been ginormously exuberant eternal optimists (which could be the main recruitment requirement for their pimp jobs.) Not a single one of them was a doom and gloomer -until a few days ago when it was made clear to them that real estate does not always go up, up to the blue-sky stratosphere.

[Nancy_s soothsayer]

Yes, yes… The Mensa-member slick grey suits with MBA’s and PHD’s employed at those pimp jobs at Moody’s, S&P, and Fitch must have been ginormously exuberant eternal optimists (which could be the main recruitment requirement for their pimp jobs.) Not a single one of them was a doom and gloomer -until a few days ago when it was made clear to them that real estate does not always go up, up to the blue-sky stratosphere.

[GoUSC]

They weren’t doom and gloom because everytime they slapped an AAA rating on a sub-prime backed CDO they stuck another check in their bank account. The whole financial system is a sham designed to take advantage of the regular joe schmo out there who doesn’t know where his pension money goes. This is just another example of it. A select few made BILLIONS of dollars on that backs of lazy fat stupid Americans (themselves to blame as well for buying homes they couldn’t afford). While those of us in the middle who didn’t buy into their shennanigans (sp??) sit on the sideline hoping (and praying) that the housing price crash really happens so that we can buy a home. Hopefully we’ll still have an economy and a job when it does.

[GoUSC]

They weren’t doom and gloom because everytime they slapped an AAA rating on a sub-prime backed CDO they stuck another check in their bank account. The whole financial system is a sham designed to take advantage of the regular joe schmo out there who doesn’t know where his pension money goes. This is just another example of it. A select few made BILLIONS of dollars on that backs of lazy fat stupid Americans (themselves to blame as well for buying homes they couldn’t afford). While those of us in the middle who didn’t buy into their shennanigans (sp??) sit on the sideline hoping (and praying) that the housing price crash really happens so that we can buy a home. Hopefully we’ll still have an economy and a job when it does.

[sdrealtor]

Beebo,
What happened to your Housing Market Bull Costume? Is it at the drycleaners this week?

[Author]

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