Analyst predicts Prime mortgage and U.S banking 'Breakdown' in 08

I like discussing the economy. I'll be the first to admit there is much uncertainty predicting future events in the economy, but sometimes the puzzle pieces appear to be convincingly in front of us and it is more of a matter of when (timing is the tuffest thing) not if. Even with that being said i will concede that guessing what exactly will happen is still difficult because alot of opinions seem to underestimate the underhanded and private rescues gov'ts are willling to take to maintain order in their society's and keep the engine going a little longer...if they wish.

More and more *Respected analysists are talking about the future in a not so optomistic way. Before i continue further i would like to get give my opinion on two thought patterns. First just because someone in 1978 (for example) said the economy was on the "road to ruin" and nothing apparently happened should not take away and be *automatically* associated with recent analysts predictions. Why? that IMO is being willfully ignorant. that is seeing more piece of mind in blissful ignorance than taking the time or having the knowledge to look at something in a critical way (esp. something that may not be great news) I think people get sometimes caught up in their Optomistic ways of thinking and fail to separate the thought that yes sometimes in someways your positive perception helps create your positive reality, ( i do because each thoughts have a certain electric impulse w/ a particular emotion or importance temporarily imprinted in your brain) and help create the reality you perceive and so it really pays to be an optomist. I beleive that this is a good mental attitude to take regarding your self , and to help form resourceful and improved relationships with people in the world. Sorry for the rant, but this is important because i think people like the conveinience that this train of thought gives them, and they carry this mental attitude on toward EXTERNAL world events, especially those that may be tough to swallow.

Now if anyone is still with me, and they understood what i was trying to get at i think the forecast for Prime mortgages to break down and for the U.S banking system to break down www.marketoracle.co.uk... is cause for some concern and critical analysis.

The people have been misled for almost a full year on the mislabeled mortgage debacle as a subprime phenomenon. That is the exposed tip of the iceberg, since it is total mortgage debacle problem

The decline in housing prices will continue to push prices down another 5% to 10% in the new year, killing off prime mortgage portfolios and their bonds. The bust will take down the entire US banking system, which is now reeling and tipsy, like a punchdrunk boxer after enduring ten rounds of a pure beating, bloodied, wobbly, dizzy, blurred in vision. The mortgage debacle will extend to the commercial property arena, the degree of which will be uncertain

these are just a couple of the many comments the analyst ( i believe Jim Willie) makes concering the year 2008 will be. From reading this it seems like it is a year the foundation breakes and i'm not sure if their will be a lag time before the average consumer notices this sharp down turn but it has my attention. I still have that occasional thought from the back of my head saying , it will be ok , just be optomistic, but then again i know this is not something i am helpless over. This is something where people would be wise to make a PLAN B, to help them prepare for the apparently growing possibility that the country undergoes a "recession" like they haven't seen in their lives and that the world's economic order is about to be shuffled along with the loss of personal freedoms that the high standard of living we have enjoyed afford's us.

Anyone have any comments and if you have a minute and even if you don't have a professional understanding of financial markets ( i am just a novice but it is a hobby of mine) give it a read .

P.S most media as you know will try to put a positive spin on almost any news, and limit the negativity in their forecasts to those things that are already painfully obvious (the reason being) that their opinions DO effect other people's behaviors (consumer behaviors) and are paramount to avoiding panic

[edit on 5-1-2008 by cpdaman]
Mod Edit: All Caps – Please Review This Link.

[edit on 1/7/2008 by Gools]

I agree with much of the analysis, except the ultimate conclusion.

This won't take down the entire U.S. banking system. What this will do is propell the U.S. economy into a second depression. This, to me, is now a foregone conclusion. Just look at all the talking head economist wanna-be's who were actually debating whether the U.S could avoid a recession late last year; those same overly-educated, paid-to-be-optimistic folks are now mulling how soft a recession we may have.

That's not the question anymore. The question is how low and how deep. Judging from Japan's experience in the 1990's, we could be in for a decade of economic stagflation and skyrocketing unemployment.

Now, will some major banking names disappear? You bet. And Greenspan will go down in history as the most irresponsible, arrogant Fed chairman who is the sole reason we're in the debacle now.

But there are many a bank out there that avoided the strange alchemy that went into commercial backed mortgages, banks that relied on the tried and true formulas of solid conservative lending and investing. Those will be fine in the long run.

But get ready: Tent cities are already popping up in areas where foreclosures are skyrocketing. The unemployment rate jumped up faster than expected at the end of the year. The dollar will continue to decline as foreign investors turn to the Euro, the Pound and other currencies, then coming to the U.S. and buying tons of distressed properties at Blue Light Special pricing.

Just watch this video:

www.youtube.com...

Everything is said .

Well Thank the Heavens others are realizing this is not just a subprime melt down that prime/conventional mortgages are in the same boat. I have been saying this for a while now, the term subprime was just a label applied to have a place to put the blame when it all goes down.
I am going to read the link now and I agree with everything you said in the OP Cpdamon.

The reason this is been predicted for this year is due to the 400 billion on write out that many institutions has keep hidden when the first wave of mortgage write outs started to pile up.

They will not be able to keep it hidden any longer and as they disclosure, so the financial institutions will be hit at the markets, I predict more CEOs losing their jobs or just resigning their positions.

But at the end is not accountability neither for this financial institution or the people that created this housing mess.

[edit on 7-1-2008 by marg6043]

Just curious as to what this means:

One can live in a house for free, but not ride a car or carry plastic for long without consequences.

Not doubting the analyst but I thought once forclosure is done that's it your out of the house, is it possible to stay and homestead?
I know in some states the forclosure process is slow but in Georgia you get 4 months no payments and the forclosure process starts. Georgia is a fast forclosure state.
I was in real estate for quite a while (pre and post kids) and I have never heard of being able to stay in your house for free, now with that said if/when forclosures start happening in mass that might be a whole new ballground.
Any ideas/guesses?

reply to post by marg6043


I agree Marg and I would really like to know where all these people are going? I have yet to see a follow up on any of these mass media shows on what happens after the forclosure. Are we going to end up a nation of homeless? how will this effect rental rates?
I could see it going both ways, people can't get out of their homes so they rent or lease/purchase at a lower rate because they are desperate or the renters far out weigh te rentals and the prices go up which really just puts us all back in the same boat, just we don't own the property anymore.

It is difficult for many hard working Americans to lose their jobs and keep up with their bills including their mortgages as more and more good pay jobs has been replaced with service jobs.

NEW ORLEANS (Thomson Financial) - The chances of a recession in the US economy are likely above 50 pct after this morning's employment report, said Harvard economics professor Martin Feldstein.

www.forbes.com...

You know how bad the economy is doing when job markets are down and people keep losing their jobs.

But interesting to point out that a while back our Mr. Bush sign a bill to make difficult for people to file for bankruptcy this was done before the housing crash, so somebody knew that it was trouble coming our way and corporate America wanted to safeguard their backsides.

President signs bankruptcy bill

What you should know about a new law that will make it tougher for consumers to clear their debts.

money.cnn.com...


Interesting.



[edit on 7-1-2008 by marg6043]

There is a little-publicized law called squatter's rights. They vary by state, but the basic premise is if someone is living in a place for an extended period of time, then the rightful owner is unable to evict said person/family from the premisis. In the end, they become owner.

Now we're not talking about squatting in a homestead for months before you become defacto owner -- it's more like years. But if the homeless quotent rises to unprecedented proportions, you can bet that banks will eventually ease off physicially evicting families for risk of really bad PR. So in the end, some defaulted homeowners can theorhetically get their homes free and clear.

It pays to know what your individual state's squatter's rights are.

This thread deserves more attention.
People this is your immediate futures, take notice, learn, debate it is time for us all to open our eyes and look around.
If it hasnt hit your neighborhood yet IT WILL very soon.
We need to all share our knowledge, we need to prepare as best we can, we need to talk of our own experiences and what is happening in our communities.
We need to come together as a community and educate each other on the real world because we are not going to get the correct information from our Government or our news.
If ever we needed to come to together as the people, for the people it is now.

I'm not a financial wizz myself, i can only vouch for myself and my friends in Australia. It seems like something is about to crack. I don't have a mortgage here in Australia, because the prices are so bloody high, but a lot of my friends and family have. I'm not exaggerating when i say that everyone i know is in trouble. Our rates have just gone up again. They are teetering around 8% now, some banks have just put them up again due to the outfall of the US Subprime, and the news is it will go up again.

It seems to me like it's only a matter of time when Australia is the next one to fall. First the US, the UK seems to be following, then us.

I don't think this is an isolated problem. I think globally it seems like the whole system is about to have a hickup. I don't think the whole thing will crumble, but it won't be a walk in the park. As i said, i'm not a financial brain, but you don't have to be to notice that something isn't right. The sums aren't adding up.

reply to post by behindthescenes


Yes in Georgia its something like 20 years but theres a catch...
If the legal owner of said property gives you permission to stay the time starts all over. So for instance you have been squatting on one property for 19 years and 11 months and the owner then gives his permission the clock starts all over again and vice versa, if the owner tries to kick you off the property time starts over again.
I do wonder what will happen though if we go in to a full blown depression, no jobs, no money to pay the mortgage then what? Will they kick millions out of their homes in a depression?

reply to post by SEEWHATUDO


I live in GA also, my neighborhood has been plague by the foreclosures, my two neighbor already lost their homes, one of them fell to unexpected long time illness he build the house and lived in for 20 years, the person that bought it on foreclosure allowed him to live in and pay rent, but when he was taken to a nursing home the people that was living with him was evicted from the home.

No fight, not bickering they just packed and were gone overnight. Right now is houses here with sale sign for a year without luck.

bump,bump,bump
So I quote myself from above

This thread deserves more attention. People this is your immediate futures, take notice, learn, debate it is time for us all to open our eyes and look around.
If it hasnt hit your neighborhood yet IT WILL very soon.
We need to all share our knowledge, we need to prepare as best we can, we need to talk of our own experiences and what is happening in our communities.
We need to come together as a community and educate each other on the real world because we are not going to get the correct information from our Government or our news.
If ever we needed to come to together as the people, for the people it is now.

So I was not wrong after all, more big financial market CEOs are falling with the housing markets.

Bear Stearns CEO Cayne Pressured to Quit After Losses

Bear Stearns Cos. Chief Executive Officer James ``Jimmy'' Cayne faces pressure to resign as the securities firm's shares languish following unprecedented losses from mortgage holdings coupled with a slump in trading and investment banking.

www.bloomberg.com...




[edit on 8-1-2008 by marg6043]

reply to post by behindthescenes


Squatting is not general tolerated or really spelled out in the United States, however there is a common law statue on most state books about "adverse possession" but generally it has to be hostile and open, sometimes you have to pay taxes on the land, it must be apparent to the owner that they know you are on their land and the land owner must not do anything to defend his property rights. It usually takes 7 to 20 years and must go through courts, very few cases ever pass the smell test!

Squatting

here's an article that goes one-better than just a Banking Breakdown in '08

the LaRouche political action committee actually says that the
fractional banking and central bank system is a Bankrupt scheme
and all the wheels are falling off

see: www.larouchepac.com...


then there's the mid-week paper by Jim Willie... ~long but compelling~

see: www.321gold.com...

an overview, more realistic than the job scared bafoonery on the
stock market channel on cable TV


hope the OP views these articles as supporting the threads outlook
thanks,

I'm wondering if B of A's acquisition of Countrywide is an act of desperation on their part. Since there were rumblings that Bank of America was in trouble and had already 'loaned' countrywide a bunch of money. Throwing good money after bad so to speak.

Of course that's not the spin being put out........ Maybe they think that they'll get better govt bailout if they control alot of mortgages?

Yes the news of Countrywide bailing out of having to file bankruptcy by Bank of American put the markets on Friday on the negative.

If the biggest mortgage company in the US is selling to a bank of America a bank that their primary business is credit card and business accounts, this tells where is the housing market going.

Bank of America has taken a big change and the way things are going they probably will regret along the line.

Originally posted by dingleberry77
I'm not a financial wizz myself, i can only vouch for myself and my friends in Australia. It seems like something is about to crack.

Simple.

Media elects Rudd.
Interest rates soar to the pre-planned level of circa 9.3 by mid-year on a non-optimal borrower loan.
As a depression hits the civilised world, people stop watching the Simpsons long enough to complain.
An unnecessary and devastating world war begins.