HousingPANIC Stupid Question of the Day

Will the Roaring 00's and the Roaring 20's be forever linked (and followed by Great Depressions?)

The banking system may not survive this housing crash. Hmmm.. wonder why Bernanke panicked and cut 1/2 point now?

When the banks start failing left and right, and the US Taxpayer has to pay out wayyyy beyond their FDIC insurance levels, HP'ers shouldn't be surprised. It hath been foretold.

From last week's hearings on Moody's and S&P's incompetence in letting the toxic loan CDO/SIV problem grow out of control:

At a Congressional hearing yesterday on the malfeasance of ratings agencies, like Standard and Poor's, in hyping the mortgage securities bubble, Rep. Paul Kanjorski (D-PA) repeatedly noted that the mortgage securities blowout is now a "systemic financial crisis." It threatens American banks with failure like that of Britain's Northern Rock and other European banks, Kanjorsky implied in a colloquy with witness Prof. Joseph Mason of Drexel University.

"You say that 10% of U.S. bank assets are based on structured investment vehicles (SIVs), specifically several trillion dollars in CDOs; can these banks survive the collapse of these CDOs? Do they have the capital base to survive that?"

Mason answered, "No, and the FDIC does not have the resources to handle that event either."

HousingPANIC Stupid Question of the Day

Did you change your investment strategy after Bernanke panicked, destroyed the dollar, and cut rates 1/2 point?

(Hint... you still have time. And I sure did, that minute to be exact...)

"The world economy 'is probably at its scariest point since the Depression' as fallout from the US subprime mortgage crisis crimps access to credit, said Ethan Penner, a pioneer of the $600 billion commercial mortgage-backed securities market in the early 1990s. 'We're probably at the closest point to a big meltdown, a depression-type meltdown than we have been in our lives,' said Penner ... now a principal at real estate fund management firm Lubert-Adler Partners LP

This quote pretty much speaks for itself

"We are experiencing home price depreciation almost like never before, with the exception of the Great Depression"

-Angelo Mozilo, Countrywide Mortgage CEO, July 2007

Too big to fail? Moody's thinks the US government won't let JP Morgan and more banks go belly up. Get the dollar printing presses ready!

Oh dear god this seems like a joke, but it's not. Moody's upgraded some of the banks about to get slaughtered by the subprime meltdown and credit crunch, thinking the US government won't let them fail.

I thought Fannie and Freddie were bad enough - but now the taxpayers would bail out banks that have made horrific decisions during the Late Great Housing Bubble and resulting collapse?

Wow.

Get ready America for days like you've never seen. You live in interesting times. Thanks HP'ers for the link.

JPMorgan Chase, Large U.S. Banks Have Ratings Raised by Moody's

JPMorgan Chase & Co., Bank of New York Co. and State Street Bank & Trust Co. gained higher credit ratings from Moody's Investors Service Inc., which said the U.S. government would back the banks if they faced default.

Moody's announced new guidelines for bank credit ratings last month that consider financial strength along with any support companies may get from government and financial institutions if they get into serious trouble. Such backing might be offered if regulators conclude the effects of a failure would be catastrophic for the nation's economy, a concept rooted in banks' financial woes in the 1980s.

``People already feel like they're too big to fail,'' said Jonathan Hatcher, senior research analyst for corporate bonds at Delaware Investments, which holds $98 billion in corporate bonds.

Will the Great Housing Crash solidify Bush's standing as the worst president in US history?

No, it's not all his fault, but as you all know, what happens on your watch as president, good or bad, is your responsibility in the eyes of the public, like Herbert Hoover during the Great Depression.

Where Bush will really get rung up will be his misguided call for an "ownership society", encouraging people to buy homes at the peak regardless of their financial standing, ability to pay or rent versus own fundamentals.

He'll also be seen as aiding an out of control REIC, never bothering to call for regulation of what was an obviously out of control mess of corruption, system gaming and fraud.

So, simple question, will this epic, historic, devastating housing crash seal the deal with the already historically unpopular George W. Bush in the American population's eyes?

Will Bush be seen as the worst president in the history of the United States of America?

HousingPANIC Stupid Question of the Day

Is America in the mess it's in today because The Greatest Generation is dying off - you know, the ones who lived through the Great Depression, and learned the lessons of frugality, selflessness, live within your means, prepare for a rainy day, take care of your fellow man, and that yes, the financial system can at any time implode horrifically?

If nobody is there to teach the lessons of The Great Depression, and the American education system spits out PS2 addicted dolts who don't know their history, and the Baby Boomer Consumer generation teaches their kids the wrong lessons (consume, consume, consume, me, me, me), then is it too much of a surprise that most Americans have no idea what's coming, and are woefully unprepared?