So why when there is a crisis such as this impending does the stock market continue to rise? The US dollar is losing against most other currencies, the US is wallowing in debt and mired in costly wars with no end in site. There is a housing bubble collapsing but the market is flying high still.
Cheers, Ken Hanly --- Louis Proyect <[EMAIL PROTECTED]> wrote: > In these Times, July 17, 2007 > Tranche Warfare > Who will be left holding the bag as subprime > mortgages go bad? > By Dave Mulcahey > > Now that the real estate bubble seems poised to go > the way of its > dot-com predecessor, a new narrative has taken hold > in the business > press. Where once reporters breathlessly touted > double-digit, > year-on-year gains in home prices, they now warn > darkly of the > "meltdown" underway in the class of exotic mortgages > that added so much > punch to the party. > > After months of dismal reports for the real estate > industry--declining > sales, rising inventories, softening prices, rising > foreclosure > rates--the news took a sharp turn for the worse in > late June, when the > investment bank Bear Stearns shut down two hedge > funds whose holdings > were laden with securities backed by subprime > mortgages. > > Suddenly, finance pundits and insiders were > speculating about just how > far the damage of bad subprime loans would spread. > Could it be > "contained"? Were more hedge funds on the verge of > implosion? Was the > debacle about to touch off a system-wide credit > crunch? > > Meanwhile, a bemused public was wondering what the > rarefied world of > hedge funds had to do a bunch of poor suckers who > had bought more house > than they could afford. How many of these loans > could there be--and how > many defaults--that a Wall Street powerhouse like > Bear Stearns was > taking it on the chops? And what's the story behind > all these subprime > loans, anyway? Whose idea was all that funky > lending? > > The insiders' questions have yet to be answered. But > for financial > naifs, the Bear Stearns imbroglio was highly > instructive. It briefly > pulled back the curtain to reveal the machinations > behind the mountain > of mortgage debt the American peasantry has piled up > during the great > housing bubble. Subprime lending in the United > States rose from $35 > billion annually in 1994 to $625 billion in 2005. A > shocking proportion > of this financing was extended on the flimsiest > pretenses of due > diligence by lenders, and carried terms and > conditions sure to ruin a > large number of borrowers. According to Fannie Mae, > between $1.1 and > $2.2 trillion in adjustable-rate mortgages will > reset to higher rates in > 2007. Another $1.4 to $2.4 trillion will reset in > 2008--half of it > subprime and another quarter less than prime. It's > difficult to see how > that will end well. Yet for a while, the bubble > seemed like some > millennial, never-ending win-win scenario. > > full: http://www.inthesetimes.com/main/article/3275/ > Blog: http://kenthink7.blogspot.com/index.html Blog: http://kencan7.blogspot.com/index.html
