March 18, 2007
Historic, devastating meltdown mode.
The MSM still hasn't quite caught up - they're still talking about the now-obvious subprime meltdown. Some of the smarter folks in the room though are saying what's the next big problem - the Alt-A (liars loan) implosion, and the overall impact of this credit unwinding on home prices.
I see Merrill predicting a 10% decline in home prices now this year, and I read waaaayy too many stories on the plane about the house of cards falling in, how subprime's implosion will mean even fewer buyers, taking prices down even faster, causing more loans to go bad, causing prices to fall even faster, causing more loans to go bad... Well, add millions of loans that investors thought were much safer - the Alt-A pool, and that bonfire burns even hotter.
Folks, even the Greg Swann's, Bob Toll's and Ben Bernanke's of the world are going to have a tough time staying in denial or liar-mode now. This game is over. The Housing Ponzi Scheme has been exposed, the Great Unwinding is underway, and the panicked rush for the exits is here.
What you are witnessing, and what you will witness, will truly be historic. Never before has such a great financial bubble arisen, propped up by such a staggering amount of leverage. The size, scope, reach and depth of the collapse will shock the world.
But not HP'ers. We saw it all coming. All of it.
And I hope you're all ready.