[Ozzie]

Mortgages will become simply unavailable

If that’s the case then the Sen. is right in asking for the limits for Fannie and Freddie to be raised. Their charter is to provide liquidity to the mortgage market. No wonder FNM is up about 20% in the last two weeks. Looks like traders have priced it in.

[Ozzie]

FWIW, my Schwab portfolio is just about 2% from where it was at the peak of the market after a nice day today. I’m heavily weighted towards DE, CAT, SLB, and BRK and a few tech and Int’l funds. Schwab just upgraded CAT today which was my only concern after their subpar results last qtr.

My dumb move was not to take action and buy puts on Moody’s. I noted last week that I was surprised there were not Congressional hearings into why the ratings agencies gave such high ratings to the junk CDO’s that Wall St created. Today Sen. Dodd called for those investigations. I’m kind of ambivalent. I know these guys messed up ad gave the ratings to gain business, but I also have exposure as BRK owns 18% of them. It will be interesting to hear Buffet’s take on this and see if he buys more on weakness over the coming months.

I’m convinced there will be a full point rate cut by the end of the year and I also think you’ll see Fannie’s conforming limit increased sharply.

[Ozzie]

FWIW, my Schwab portfolio is just about 2% from where it was at the peak of the market after a nice day today. I’m heavily weighted towards DE, CAT, SLB, and BRK and a few tech and Int’l funds. Schwab just upgraded CAT today which was my only concern after their subpar results last qtr.

My dumb move was not to take action and buy puts on Moody’s. I noted last week that I was surprised there were not Congressional hearings into why the ratings agencies gave such high ratings to the junk CDO’s that Wall St created. Today Sen. Dodd called for those investigations. I’m kind of ambivalent. I know these guys messed up ad gave the ratings to gain business, but I also have exposure as BRK owns 18% of them. It will be interesting to hear Buffet’s take on this and see if he buys more on weakness over the coming months.

I’m convinced there will be a full point rate cut by the end of the year and I also think you’ll see Fannie’s conforming limit increased sharply.

[Ozzie]

FWIW, my Schwab portfolio is just about 2% from where it was at the peak of the market after a nice day today. I’m heavily weighted towards DE, CAT, SLB, and BRK and a few tech and Int’l funds. Schwab just upgraded CAT today which was my only concern after their subpar results last qtr.

My dumb move was not to take action and buy puts on Moody’s. I noted last week that I was surprised there were not Congressional hearings into why the ratings agencies gave such high ratings to the junk CDO’s that Wall St created. Today Sen. Dodd called for those investigations. I’m kind of ambivalent. I know these guys messed up ad gave the ratings to gain business, but I also have exposure as BRK owns 18% of them. It will be interesting to hear Buffet’s take on this and see if he buys more on weakness over the coming months.

I’m convinced there will be a full point rate cut by the end of the year and I also think you’ll see Fannie’s conforming limit increased sharply.

[Ozzie]

What HD do you go to? I went to the one in Encinitas last weekend and waited in the garden area for abut 20 minutes and they had all 3 or 4 cash registers open. I hate going there because it’s crowded every day of the week. I’ve never seen only 1 or 2 checkout counters open. Same with Costco. Busy 7 days a week. Still wouldn’t buy HD stock though. Seems like there is a HD or Lowes in every city.

[Ozzie]

What HD do you go to? I went to the one in Encinitas last weekend and waited in the garden area for abut 20 minutes and they had all 3 or 4 cash registers open. I hate going there because it’s crowded every day of the week. I’ve never seen only 1 or 2 checkout counters open. Same with Costco. Busy 7 days a week. Still wouldn’t buy HD stock though. Seems like there is a HD or Lowes in every city.

[Ozzie]

What HD do you go to? I went to the one in Encinitas last weekend and waited in the garden area for abut 20 minutes and they had all 3 or 4 cash registers open. I hate going there because it’s crowded every day of the week. I’ve never seen only 1 or 2 checkout counters open. Same with Costco. Busy 7 days a week. Still wouldn’t buy HD stock though. Seems like there is a HD or Lowes in every city.

[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.

[Ozzie]

A recession? Hmmmm, while the front page of the WSJ talked about subprime losses and how Wall St. and the rating agencies once again conspired to screw investors (by issuing high ratings to suspect CDO’s) you had to flip the page to read a small story that our trade gap narrowed in Q2 and that the economy expanded greater than previously thought for Q2 and will likley exceed most economists forecasts in Q3. As I have previously said, the subprime debacle is more to do with Wall St. fleecing investors once again than with homeowners defaulting on mortgages. Just as you saw stock anlaysts taken to the woodshed after the internet bubble broke you’ll see the boys at Moody’s and S&P take some lashes as well they should.

Sticking a positive story on the front page wouldn’t sell papers. Looks like Murdoch already has taken over the layout of the Journal.

[Ozzie]

A recession? Hmmmm, while the front page of the WSJ talked about subprime losses and how Wall St. and the rating agencies once again conspired to screw investors (by issuing high ratings to suspect CDO’s) you had to flip the page to read a small story that our trade gap narrowed in Q2 and that the economy expanded greater than previously thought for Q2 and will likley exceed most economists forecasts in Q3. As I have previously said, the subprime debacle is more to do with Wall St. fleecing investors once again than with homeowners defaulting on mortgages. Just as you saw stock anlaysts taken to the woodshed after the internet bubble broke you’ll see the boys at Moody’s and S&P take some lashes as well they should.

Sticking a positive story on the front page wouldn’t sell papers. Looks like Murdoch already has taken over the layout of the Journal.

[Ozzie]

A recession? Hmmmm, while the front page of the WSJ talked about subprime losses and how Wall St. and the rating agencies once again conspired to screw investors (by issuing high ratings to suspect CDO’s) you had to flip the page to read a small story that our trade gap narrowed in Q2 and that the economy expanded greater than previously thought for Q2 and will likley exceed most economists forecasts in Q3. As I have previously said, the subprime debacle is more to do with Wall St. fleecing investors once again than with homeowners defaulting on mortgages. Just as you saw stock anlaysts taken to the woodshed after the internet bubble broke you’ll see the boys at Moody’s and S&P take some lashes as well they should.

Sticking a positive story on the front page wouldn’t sell papers. Looks like Murdoch already has taken over the layout of the Journal.

[Ozzie]

I agree that jumbo rates will come back down. CFC is in the lending business. The liquidity crunch will play out and there will be other lenders that will jump at the chance to undercut the rate gouging practices of Angelo and co.

This entire “credit crunch” is not really about subprime borrowers. It’s about the gamblers on Wall St. who made 1000 bets on every subprime mortgage and that multiplied the underlying, crappy asset. The creation of these derivatives and the inability of the rating agencies to be able to judge their actual worth (or to look the other way as they collected their fees and rated them as “A+ paper” so the traders could sell them) magnified the situation even further. A lot of people here harshly judge the borrowers who took out loans they couldn’t repay and I have no problem doing the same, but I have more contempt for the Wall Streeters who are getting killed.

[Ozzie]

I agree that jumbo rates will come back down. CFC is in the lending business. The liquidity crunch will play out and there will be other lenders that will jump at the chance to undercut the rate gouging practices of Angelo and co.

This entire “credit crunch” is not really about subprime borrowers. It’s about the gamblers on Wall St. who made 1000 bets on every subprime mortgage and that multiplied the underlying, crappy asset. The creation of these derivatives and the inability of the rating agencies to be able to judge their actual worth (or to look the other way as they collected their fees and rated them as “A+ paper” so the traders could sell them) magnified the situation even further. A lot of people here harshly judge the borrowers who took out loans they couldn’t repay and I have no problem doing the same, but I have more contempt for the Wall Streeters who are getting killed.

[Author]

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