Willi: Should I be trembling in my shoes?

[Karl]

Liquidity problems in the USA?
Are we headed for a recession?

[Willi]

Bwoy Karl,

You know my views from years back.

I have not been following things lately as for me it is a matter of time to financial reckoning day.

As to if this is a hiccup, or the start of things to come....I dont know.

[Karl]

The problem is George Bush is one of those saying no need for Federal intervention...and, you know his standing...

...and, Wall Street seems to be in, if not panic mode damn near it.

[Mosiah]

Good excuse for Bruce when he becomes Prime Minister. Di freeness cyaan happen anymore because the world is in a recession.

He's probably praying for it to happen.

[Karl]

The morgage bankers are dropping like flies. ...and, the housing stock is growing as too many potential buyers cannot qualify for mortgages within the tighter mortgage credit guidelines.

Foreclosures are at an all-time high. Builders are downsizing. In my town you would be surprised to see the number of brand new empty houses....and, the numbers of houses (new & re-sales) on the market. Damn if it continues we may soon have former $300,000.00 houses going going for $40,000.00. We already have some going for $150,000.00 range...and no takers.

Lots (1/3 acre) that were going for $100,000.00+ now being offered for $50,000.00, $40,000.00 and the $30Ms...and, no takers.

One of the largest mortgage bankers in Georgia just went belly up! The largest in Tuscon, Texas this week stopped underwriting mortgage loans...seems to be going belly up...

Countrywide the largest in the USA is in trouble even after closing on (borrowing) $11.00+ billion to keep it making loans....

What next?????

...oooooh the huge low budget retailers Wal-Mart and Home Depot see sinking sales...

What next???? ...as the domino effect runs through US industries and markets?????????

...the Fed lower interest rates and embark on the greatest investment in improving social services and physical infastructure? Good years are coming!!!!

...but, when will the Feds get going?

[Willi]

Hehehehehe.

Portia too.

Dem both hoping.

PNP manifesto full ah promise too. Check it out. LoL

[Islandman]

How long is it till that day of reckoning though, months, years, decades? People have been preaching a global financial meltdown since the break from the gold standard in the 70s and many were certain it would come after the bubble of the 90s. Still hasn't happened.

It will probably happen in the long run but as one economist said years ago, in the (very) long run most of us will be dead.

[Islandman]

Many of those mortgage bankers deserve to fail. If you are lending hundreds of thousands to people with limited ability to repay then....

As the real estate prices, this correction should burn a few people and flush them out of the market so we can have some sanity back. Here in Central Florida I'm giving it another 6-9 months and then I'll start searching through the rubble for some deals. It wouldn't surprise me if some of these newly built or converted condos will be going for under 100K by then.

[Willi]

Ah, but peole dont really care about a global fallout...they care about a fallout that affects THEM.

To you, it may seem like a hiccup, to another its financial armageddon! Depends on your pespective and involement.

I see you consider picking thru the rublle. Do you factor in greatly restricted CREDIT going fwd. That means if you dont have catch, you may not be able to act on those bargains. Tight money environment is something really different, liquidity takes on a huge premium.

[Islandman]

I definately expect greater restricted credit, the greater the restriction the better the bargains.

I don't expect it to go as far as cash-only transactions,if it gets that far I am sure I will have much bigger issues to worry about than real estate bargains, but certainly upwards of 25% down on residential real estate.

[Willi]

It could well be. However, in a liq. squeze interest rates go up and lenders get selective. Remember the pendulem tends to swing to the other extreme...at least for a while. That intervening period is all it takes to wipe out highly levered players.

In a higher interest rate period, (even with lower Fed discount rates, the risk premium demanded can make overall commercial rates still spiral upwards), the cost of carrying expensive debt in a limp economy can eventually cause disaster, even for the bargain scavenger.

Careful does it...is the watchword.

[Assasin]

I understand that currently people earning as much as 200,000 having problem getting mortgages. There is a tight credit squeeze on now. I can say we recently try to do a little thing and brother the bank try to jack up the interest on us and the amount of document them wanted at the last minute, I can't imagine if it get any tighter.

[Me]

I understand that currently people earning as much as 200,000 having problem getting mortgages. There is a tight credit squeeze on now. I can say we recently try to do a little thing and brother the bank try to jack up the interest on us and the amount of document them wanted at the last minute, I can't imagine if it get any tighter.

People at that income level who have a problem getting a loan is probably because of the value of the house that they are interested in (unless they had something that seriously affected their FICO score)

There Loan To Home Value and Payment to Income ratios are probably too high.

[Assasin]

maybe true but a while back if you had 20% to put down them hardly ask you for anything more.

What I am saying is what you are saying, the credit squeeze is on.

[Me]

They probably happy for 20% now.

95, 97, 100% and 103% financing were becoming the common thing.

Too many of them were listening to Karl and saying "no bubble, up up up the real estate shal go"