Friday, August 3, 2007
WATCH THIS
H/T to Olives for the link.
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Take this with a grain of salt of course. Victoria is different; we don't have adjustable rate mortgages. But if you don't think our economies are interconnected, think again. Remember this is coming from the man, Jim Cramer, who not more than a year ago was preaching that the sub-prime mortgage crisis was contained. Well, Cramer, not so much eh? View more Cramer content here.
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18 comments:
Someone else mentioned that it is all a bit of a wake-up call to all those who think the business cycle doesn't exist. We appear to be right at the point of the credit contraction/bust stage after the huge asset inflation/boom stage. Next stop: Deflation.
It seems so extreme, and yet the predictions are coming to pass.
Freaky, yet fascinating....
Tonight we were just watching a British house buying show and they were showing British people buying in Spain. Seems a lot of British people are buying in Spain.
I know. I didn't quite understand it either since I thought everyone was moving to Victoria.
Cranes all over Spain. So much building going on that they have an oversupply.
One of the major things I realized from the show is that there really is global credit happening all over and there will be/is a global credit crunch coming.
S2
Front page headline of the New York Times today:
"Stocks tumbled on fears that worsening ills in the mortgage and debt markets could soon take a significant toll on the overall economy."
Those who think a bad US economy won't effect Canada have to seriously rethink their position.
S2, that show is dated. Apparently the brits aren't buying in Spain any more, so the Spanish market crashed. It seems the brits stoped buying outside of London too... so everything there looks eerily similar to here. They must be reading the same economic papers as us.
I enjoy watching Cramer and usually respect his market calls. To see him screaming that THIS IS ARMAGEDDON! made me not only grin and laugh, but also think, crap, how are things gonna look in North America in the coming years?
S2
The Brits have always bought in Spain. Was this an old show?
Property has collapsed in Spain due to over-building, easy credit and huge debt.
One thing is interesting Europeans are great savers and usually don't have high debts not like North Americans and Brits. Anyway for the first time Europeans are in debt due to property and things are turning there. My mother-in-law lives in France and she says things are starting to turn.
We should watch Europe more.
I wonder if that was not an old show. I will try to dig up some stuff on Spain.
S2,
Sorry. I didn't read HHV's comment.
"I enjoy watching Cramer and usually respect his market calls. To see him screaming that THIS IS ARMAGEDDON! made me not only grin and laugh, but also think, crap, how are things gonna look in North America in the coming years?"
It's kind of like driving past a car wreck: you can't help but look/listen when Cramer is "going off" about whatever he's talking about on the day.
To hear him say that it's not sub-prime anymore but all mortgages and is driven by HELOCs should be a wake-up call to Canadians. What's the number one product sold by banks these days in Canada? I'll give you a hint: it ain't mortgages or GICs.
I wish they would put dates on these shows.
I figured it was old because I've heard about Spain but still to actually see all the building and the cranes. The building part of it looked a lot like...well...Victoria.
The views and weather were very different.
I couldn't believe that you could pay half a million in Spain and get this beautiful home with beautiful views or a 2 bedroom, needs updating old house in Oak Bay.
S2
I see the Bear Sterns head honcho statement about the bond market being the worst in 22 years is what set Cramer off, I have never seen him that ballistic,he must be losing a bundle.
"Bear CFO: Bond turmoil 'extreme'
Sam Molinaro says fixed-income market condition could be worse than the 1980s stock market fall and Internet bubble burst."
August 3 2007: 5:16 PM EDT
NEW YORK (Reuters) -- Bear Stearns Cos. Friday said it is weathering the worst storm in financial markets in more than 20 years after a major rating company warned mortgage credit problems could hurt the investment bank's profits.
Bear Stearns' chief financial officer said the shockwaves hitting lending markets, triggered by rising mortgage losses, were as bad as crises such as the Internet bubble bursting in 2001 or the 1998 collapse of hedge fund Long-Term Capital Management.
"These times are pretty significant in the fixed-income market," CFO Sam Molinaro said on a conference call with analysts. "It's been as bad as I've seen it in 22 years. The fixed-income market environment we've seen in the last eight weeks has been pretty extreme."
Another quote I came across but cant seem to find tonite is a statement how the analysts can't believe how fast the liquidty is tightening and they had never seen nor expected it to be so swift. Exactly what I posted about what the Canaccord portfolio manager predicted several months ago.
Borrow a hundred dollars and it's your problem. Borrow a million dollars and it's the banks problem. I think we are seeing the latter coming to fruition.
We were at a dinner party last night and between the 3 baby boomers that were there and 2 more we know who weren't there there are 17 properties (condos and SFHs).
So 5 baby boomers own 17 properties.
One of them just wasn't getting us when we said that people aren't moving here in droves and buying up property. He couldn't understand who was buying all this property until I counted out for him that 5 of them own 17 properties. He got it then and that he was one of them.
S2
When the non-subprime's go under it's time to take serious notice of what is to come here. If the regular joe's can't pay down there then what makes us so different ?
"And, unlike New Century and most of the other bankrupt lenders, American Home Mortgage was not a “subprime” lender. Subprime lenders cater to home buyers with spotty credit histories. Almost none of American Home Mortgage's $58.9 billion in home loans last year were to subprime borrowers."
"After the initial flare-ups at the bottom rung of the mortgage industry's credit ladder, a number of economists including Federal Reserve Chairman Ben Bernanke said the problems in subprime were likely to remain contained."
"But American Home Mortgage's bankruptcy, plus indications of problems with prime home-equity loans at Countrywide Financial Corp., are being taken as evidence the upheaval in subprime has spread."
http://www.reportonbusiness.com/servlet/story/RTGAM.20070806.wamericanhome0806/BNStory/Business/home
Liquidity is there...until it's not. Within just a few days millions of people are simply not able to get mortages/loans/etc anymore. Something I was reading today said that Wells Fargo increased rates on their 30-year jumbo mortgage from 6 7/8 to 8 percent overnight.
You can look up Wells Fargo's actual mortgage rates at wellsfargo.com...
no comments on Cramer's "outburst" jmk? I had looked forward to your take on things...
Sorry, I didn't really have too much opinion about it. All I know is that Jim Cramer is an entertainer whose job is to create publicity for himself. As such I weigh his opinions about as heavily as I would, say for instance, Rush Limbaugh's.
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