September 02, 2007

Who'd have thought that America's imploding housing market and mortgage meltdown would cause a worldwide financial collapse?

The US housing panic and mortgage meltdown will be felt around the world. The innovation of CDOs spread the US cancer everywhere.


As home prices crater, foreclosures soar and the US housing market implodes, people around the world will wonder how idiots like Casey Serin, Angelo Mozilo, Alan Greenspan, Bob Toll and David Lereah took down the global financial system.


We live in interesting times HP'ers, and you're at the center of the storm. Buckle up, it's gonna get bumpy.

We all stand in the shoes of US mortgage-holders now. The financial system, we now know, relies on them. In recent weeks, a string of European banks has discovered that they had lent to US borrowers, as investment-grade securities they held turned out to be contaminated by bad US subprime mortgage bonds.

With the risk of US mortgage defaults now dispersed globally, not just Americans but everyone else in the developed world has an interest in averting an escalation in US defaults.

There is also a global search for culprits. Alas it turns out that almost nobody is blameless.

The importance of US housing is hard to overstate. For at least a year now, a central risk on investors' radar screens has been that falling house prices would force US consumers to spend less. That could cut global demand. Housing data this week was that US house prices were falling and the overhang of unsold properties was rising.

14 comments:

armored edsel said...

I think it serves them right for trusting the Wall Street snakes instead of doing their own due diligence. We peons are smart enough not to get suckered in when a Wall Street mouthpiece screams STRONG BUY. The rest of the world needs to realize that Wall Street is there to steal as much money as possible. Anybody could do the math and realize that it was a ponzi scheme that they were financing.

LaTechDude said...

our cdo's provide liquidity and the passing of risk, so our markets will adjust quicker. got to believe that other countries where prices rose faster then incomes will adjust as well. Keith, any idea where mortgages go in Australia, UK, Germany, France? do the banks hold them in perpetutity or do they sell them somehow as well? if so they will have a pretty big mess over there too.

GreedKills said...

Have you ever considered this?

We sold our toxic loans to the rest of the world.

Who says they didn't sell their toxic loans to us?

Anonymous said...

A-chooo!

Anonymous said...

It seems they should be having similar problems with the insane housing valuations in Europe as well.

Is this not the case?

Anonymous said...

NO FLIPPER BAILOUT!!!!!

Flippers fuel foreclosures

Flippers and other speculators investing in single-family homes helped drive up prices in many hot housing markets during the boom. Now they're contributing heavily to mortgage delinquencies in several of those markets.

"California, Nevada, Arizona and Florida were among the states with the fastest home price appreciation over the last five years. This...attracted both speculators and home builders, a volatile combination that led to an over-supply of homes that was beyond the capacity of the local populations to support," Duncan said.

"When this over-supply became apparent and prices began to fall, many of these investors simply walked away from their mortgages."

http://biz.yahoo.com/cnnm/070830/083007_flippers_fuel_foreclosures.html?.v=2&.pf=loans

Anonymous said...

can't blame ME, mofo, i didn't get greedy and buy into that horsesh*t!

SeattleMoose said...

The American Cancer spreads...

Meanwhile America tries desperately to hide its ever-growing tumors.

Pretty soon there will be no hiding the fact that America looks like an extra from Night of The Living Dead.

Anonymous said...

and the builders keep on building...

How do they plan on making money???

Volume!

Anonymous said...

Who says they didn't sell their toxic loans to us?

We don't have any savings to buy their debt. We sell debt. Asians and Europeans buy our debt because they have excess savings. That's because they don't spend it on $3000 plamsa TV's and spinner rims. In the end, they got nothing for their savings while we have big ugly Escalades with shiny chrome spinners.

Anonymous said...

Tell me the US taxpayer is NOT subsidizing SUB-Prime debt and supporting many of these same countries through the US millions infused into the United nations and the World bank!

The impact of this CDO issue is nothing when compared to the nation building via the marshall Plan and countless NATO treaties the US taxpayer has shoulderd for fifty years.

I would say that this will not even come class to the real cash call the US taxpayer has on the banks and benficiary populations of Europe, Asia and Africa, not the mention the huge subsidy due to illegal aliens being harbored from Latin America.

Its poetic justice. Stop buying into fiat currency based investments where some central bank controls the fate of your wealth. Hard assets are what really count going forward.

Anonymous said...

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Keep moving folks, Nothing to see here!



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Anonymous said...

The CDO guys on Wall St. just originated more IOUs on America than could ever be paid off. I hope you feel proud of yourselves. You've ruined it for everyone.

buyerwillepb said...

They used to say, housing won't crash because unemployment is at an all time low.

They used to say, housing won't crash because the (global) economy is still great.

They used to say, housing won't crash because interest rates are so low.

They never even considered that the fall of housing would be the catalyst causing all these other economic elements to crash along with it.

*Well, WE in these blogs considered it.*