Stocks Dive 208 on Credit Problems

[PerryChase]

Ozzie, why would the MBS ratings even be a problem if, as you claim, the homeowners are still paying their mortgages? And how then do you explain the record foreclosures?

Do you think that foreclosures will only be small ripple in the economy?

I don’t know about the rest of the country, but San Diego will definitely have a painful recession.

[rb_engineer]

PerryChase,

Everytime the stock market goes down like this, there’s always fear. However, are you going to sell all your holdings (stocks, housing, etc) and convert them to cash everytime this happens? This is what wallstreet wants you to do. History has always proven that people who panic (at highs AND lows) are always the ones left holding the bag… Housing prices will not fall like a rock like you say. It will move gradually. Would you rather be holding realestate or stocks in times like this?

[rb_engineer]

PerryChase,

Everytime the stock market goes down like this, there’s always fear. However, are you going to sell all your holdings (stocks, housing, etc) and convert them to cash everytime this happens? This is what wallstreet wants you to do. History has always proven that people who panic (at highs AND lows) are always the ones left holding the bag… Housing prices will not fall like a rock like you say. It will move gradually. Would you rather be holding realestate or stocks in times like this?

[rb_engineer]

PerryChase,

Everytime the stock market goes down like this, there’s always fear. However, are you going to sell all your holdings (stocks, housing, etc) and convert them to cash everytime this happens? This is what wallstreet wants you to do. History has always proven that people who panic (at highs AND lows) are always the ones left holding the bag… Housing prices will not fall like a rock like you say. It will move gradually. Would you rather be holding realestate or stocks in times like this?

[drunkle]

so how many shares of mp3.com do you still own?

[drunkle]

so how many shares of mp3.com do you still own?

[drunkle]

so how many shares of mp3.com do you still own?

[Ozzie]

When did I say everyone is paying their mortgage? I’m saying this is a bigger problem on Wall St. than on Main St.
Of course there will be foreclosures, but the bigger hit will be if companies like CFC go BK and lay off 20,000 people. Then if effects Main St. That’s why the Fed needs (and will) keep the spigot open. This wouldn’t have taken place if not for the creation of CDO’s that were not what they appear to be and the nudge-nudge, wink-wink relationship between the bond raters and their clients

If the underwriters of those loans had to hang onto them rather than sell them we’d see a much different market for those loans and credit in general. And those who bought them (Wall St) only did so because they had the ratings agencies in their back pockets and they knew they could resell them as AAA paper even though they were junk grade at best.

The guys who started New Century made millions upon million and the firms who bought and resold their junk made millions more in fees. New Century files BK and fires everyone, but all their top execs made out like bandits. Now investors that invested based on AAA and AA ratings are left holdng the bag of junk. I guarantee you will see congressional hearings where Moddy’s and S&P are grilled on this. I question why it hasn’t happened already.

I’m wondering what Warren Buffet thinks of Moody’s since BRK owns about 18% of them? BRK issues credit default insurance. How come I have a feeling they aren’t exposed to this very much. I sure hope not because I’m a shareholder.

[Ozzie]

When did I say everyone is paying their mortgage? I’m saying this is a bigger problem on Wall St. than on Main St.
Of course there will be foreclosures, but the bigger hit will be if companies like CFC go BK and lay off 20,000 people. Then if effects Main St. That’s why the Fed needs (and will) keep the spigot open. This wouldn’t have taken place if not for the creation of CDO’s that were not what they appear to be and the nudge-nudge, wink-wink relationship between the bond raters and their clients

If the underwriters of those loans had to hang onto them rather than sell them we’d see a much different market for those loans and credit in general. And those who bought them (Wall St) only did so because they had the ratings agencies in their back pockets and they knew they could resell them as AAA paper even though they were junk grade at best.

The guys who started New Century made millions upon million and the firms who bought and resold their junk made millions more in fees. New Century files BK and fires everyone, but all their top execs made out like bandits. Now investors that invested based on AAA and AA ratings are left holdng the bag of junk. I guarantee you will see congressional hearings where Moddy’s and S&P are grilled on this. I question why it hasn’t happened already.

I’m wondering what Warren Buffet thinks of Moody’s since BRK owns about 18% of them? BRK issues credit default insurance. How come I have a feeling they aren’t exposed to this very much. I sure hope not because I’m a shareholder.

[Ozzie]

When did I say everyone is paying their mortgage? I’m saying this is a bigger problem on Wall St. than on Main St.
Of course there will be foreclosures, but the bigger hit will be if companies like CFC go BK and lay off 20,000 people. Then if effects Main St. That’s why the Fed needs (and will) keep the spigot open. This wouldn’t have taken place if not for the creation of CDO’s that were not what they appear to be and the nudge-nudge, wink-wink relationship between the bond raters and their clients

If the underwriters of those loans had to hang onto them rather than sell them we’d see a much different market for those loans and credit in general. And those who bought them (Wall St) only did so because they had the ratings agencies in their back pockets and they knew they could resell them as AAA paper even though they were junk grade at best.

The guys who started New Century made millions upon million and the firms who bought and resold their junk made millions more in fees. New Century files BK and fires everyone, but all their top execs made out like bandits. Now investors that invested based on AAA and AA ratings are left holdng the bag of junk. I guarantee you will see congressional hearings where Moddy’s and S&P are grilled on this. I question why it hasn’t happened already.

I’m wondering what Warren Buffet thinks of Moody’s since BRK owns about 18% of them? BRK issues credit default insurance. How come I have a feeling they aren’t exposed to this very much. I sure hope not because I’m a shareholder.

[HereWeGo]

Ozzie-
I agree that the economy was in good shape, but this top down squeeze will affect Main Street if it continues for much longer, much as you suggested.

[HereWeGo]

Ozzie-
I agree that the economy was in good shape, but this top down squeeze will affect Main Street if it continues for much longer, much as you suggested.

[HereWeGo]

Ozzie-
I agree that the economy was in good shape, but this top down squeeze will affect Main Street if it continues for much longer, much as you suggested.

[PerryChase]

Ozzie, if weren’t for the secondary market of mortgages, we wouldn’t have had the easy money that allowed families to get in over their heads. If lenders had to hang on to the loans they made, they would’ve been more careful with the underwriting. It’s a chicken and eggs issue.

While I think that this mortgage mess will lead to a recession, the American consumer is resilient and the general economy will recover much faster than housing.

[PerryChase]

Ozzie, if weren’t for the secondary market of mortgages, we wouldn’t have had the easy money that allowed families to get in over their heads. If lenders had to hang on to the loans they made, they would’ve been more careful with the underwriting. It’s a chicken and eggs issue.

While I think that this mortgage mess will lead to a recession, the American consumer is resilient and the general economy will recover much faster than housing.

[Author]

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