The Impending Second Great Depression

[FrreeeBird]

Also, something I failed to mention in my original post . . . local and state governments are going to run into massive funding issues as property and sales tax revenues plummet.

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[Whats Up DOHC]

Originally Posted by FrreeeBird

Also, something I failed to mention in my original post . . . local and state governments are going to run into massive funding issues as property and sales tax revenues plummet.

Yea what's the deal with that? Weren't all these properties valued by municipal people? Why's nobody talking about that?

[FrreeeBird]

Originally Posted by Whats Up DOHC

Yea what's the deal with that? Weren't all these properties valued by municipal people? Why's nobody talking about that?

Well, a lot of these towns and cities reaped in huge tax windfalls as prices went through the roof, yet many failed to balance their budgets . . . .

Lots of citizens shit a brick when they got tax bills, I believe lawsuits were filed in a lot of places, etc.

Not going to be a problem for long though . . .

[FrreeeBird]

Jobless claims jump by 9000, analysts thought they would drop by 2000 . . . whoops.

http://biz.yahoo.com/ap/070830...?.v=4


Modified by FrreeeBird at 2:31 PM 8/30/2007

[juevi]

JobLESS claims?

[FrreeeBird]

Originally Posted by juevi

JobLESS claims?

I fixed it.

[juevi]

Is anybody here taking precautions to the "possible" impending crash, and/or terrorist attack and crash?

If so, what are you doing? Just curious.

[FrreeeBird]

Bump, I'm pretty sure this week will be looked upon as the beginning of the crash. Economic indicators are looking awful across the board, unless that is, you believe the BS the gov't is telling you about inflation and unemployment.

[Whats Up DOHC]

Originally Posted by FrreeeBird

Bump, I'm pretty sure this week will be looked upon as the beginning of the crash. Economic indicators are looking awful across the board, unless that is, you believe the BS the gov't is telling you about inflation and unemployment.

Yea it's getting ugly. Everybody involved with anything that has to do with finances is feeling the pinch.

[FrreeeBird]

http://www.marketoracle.co.uk/Article2059.html

READ THE EMPLOYMENT PART OF THE ARTICLE!

[Rguy]

I read your OP, and it's a ****ing home run. People like to say about the housing market "oh in this area it wont be too bad, maybe a little drop, but nothing bad". PSH. it doesnt take a genius to realize that this housing bubble is absolutely HUGE, and its gonna pop, and pop bad. Why? A great amount of housing sold in the past was to first time buyers.. In fact, the housing market DEPENDS on first time buyers...but that market got greedy and as prices rose, the only way to get first time buyers into houses was these ridiculous loans they began to give out like candy. But not anymore...first time buyers wont be able to buy for a LONG time. However long it takes for houses to fall to prices that people can pay with wages that wont be going up fast.

And now here we sit, with houses all around us that no one can afford to buy, and no one can afford to keep anymore as their mortgages continue to adjust and rape them. And to worsen it, we have credit card companies racking up huge losses as people put everything on the plastic to stay afloat, for the short term.

And people continue to deny this... or think it "wont be that bad"....WAKE UP! it's going to be terrible..

My roommates BF, is 22 and a realtor..he drives an 06 M3.. i recently told him to start looking for a new job early, not as a dick, but because i see it coming and he should too. His typical response... "it wont be that bad in this area.."


Anyway, you're def on the same page as me...

[FrreeeBird]

Originally Posted by Rguy

My roommates BF, is 22 and a realtor..he drives an 06 M3.. i recently told him to start looking for a new job early, not as a dick, but because i see it coming and he should too. His typical response... "it wont be that bad in this area.."

Realtors and the NAR are going to be lynched by the American public when this is all said and done. I will NEVER use one when buying a house in the future, not after what I've learned in the last year.

[ricodemus]

Good post Freeebird. I'm waiting for the right time to refi my ARM to a 30 year fixed. I've got my broker/friend updating me with rate information. He's interested as well since he's in the same boat as I am.

[Rguy]

More ammo for this argument. The article still is soft though, but is evidence of plenty of trouble in the market. While reading it, you just get the sense of them trying to say "yes, it's bad..but there is a good outlook!" lol, idiots.

http://money.cnn.com/2007/09/1...n=yes

[newt2]

<---- Long time no post.

I think we're going to see much the same pattern as we saw in the late 70's and early 80's. We're already on that same path, 20 years or more of (arguably unsustainable) growth with relatively few blips followed by an expensive and unpopular war. What we get from that scenario is lots of bubbles in the various economic sectors, large national debt, inflation and job loss. In the next 3-5 years I think we'll see the same result we saw before, interest and inflation rates in the 13-18% range, unemployment in the 10% range, a correction (followed by a stagnation) in the housing market and an increasingly difficult energy crisis.

That's the bad news. There is good news though.

As long as you can retain gainful employment and live within your means, like most Americans of the 1970's, you'll be fine.

The housing market is only going to fall so far. I forget who said it but land is the only thing that they're not making more of. Some of the growth in housing was for sure caused by loose lending practices, but not all of it. The simple fact is that people need places to live and they need those places to be relatively close to where they work. That alone will keep housing somewhat stable. You're not going to use it as an ATM anymore, but I'd be surprised to see more than a 10% drop in housing among the worst hit markets. Here in Colorado we're already over the hump in foreclosures because our market went down a couple years before the rest of the country. I expect another 1-2% loss and then a stable market, which still leaves me with about 50 grand in equity.

Other good news is that even though the stock markets will probably suffer, precious metals and money markets will do well, as they did in the late 70's. In 1980 gold hit almost $1000 per ounce and a basic savings account was paying over 5%. Money markets and CDs were in the double digit range. Moral of the story, it might be time to think about selling stocks and going to gold, CD's and money markets. Gold is already up over the last few years and it should keep climbing. I've read estimates that suggest it might hit $2000 an ounce in the next five years.

We're headed for some rough times, that's for sure. I don't see us heading towards another great Depression with mile long soup lines and thousands living in boxes in Central Park and in front of the Washington Monument though.

[Danziver]

Originally Posted by newt2

As long as you can retain gainful employment and live within your means, like most Americans of the 1970's, you'll be fine.

x2
Buckle down, tighten you belt, and keep debt to a minimum.

[FrreeeBird]

Originally Posted by newt2

I think we're going to see much the same pattern as we saw in the late 70's and early 80's. We're already on that same path, 20 years or more of (arguably unsustainable) growth with relatively few blips followed by an expensive and unpopular war. What we get from that scenario is lots of bubbles in the various economic sectors, large national debt, inflation and job loss. In the next 3-5 years I think we'll see the same result we saw before, interest and inflation rates in the 13-18% range, unemployment in the 10% range, a correction (followed by a stagnation) in the housing market and an increasingly difficult energy crisis.

That's the bad news.

Agreed, though this isn't just a 70s scenario, its 1929 1987 1997 all wrapped into one but worse and with more facets.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">There is good news though.

As long as you can retain gainful employment and live within your means, like most Americans of the 1970's, you'll be fine.</TD></TR></TABLE>

This country's economy is no longer production and industrial based like it was in the past though. Everything is about consumption and services, much of which has been bought with credit or HELOC money . . . . . so take away the equity and the easy access to credit and the house of cards crumbles.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">The housing market is only going to fall so far. I forget who said it but land is the only thing that they're not making more of. Some of the growth in housing was for sure caused by loose lending practices, but not all of it.</TD></TR></TABLE>

Did wages tripple from 1997 through 2007? No. So yes, much of it was driven by exotic loans and cheap interest rates (2001-2006), all of which have disapeared. The crash in housing is going to continue through mid 2009.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">The simple fact is that people need places to live and they need those places to be relatively close to where they work. That alone will keep housing somewhat stable.</TD></TR></TABLE>

Yes, people need a place to live, but if people can't afford to buy a home with a traditional fixed rate mortgage and 20% down then prices WILL drop. Why do you think millions are facing foreclosure? Its because they had to do crazy loans like I mentioned in the OP to buy a house, which created artificial demand, which drove prices up like crazy. Take away the artificial demand and prices will return to the norm (1997 levelish from what I've read) which is about a 40% drop from the 2007 peak.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">You're not going to use it as an ATM anymore, but I'd be surprised to see more than a 10% drop in housing among the worst hit markets. Here in Colorado we're already over the hump in foreclosures because our market went down a couple years before the rest of the country. I expect another 1-2% loss and then a stable market, which still leaves me with about 50 grand in equity.</TD></TR></TABLE>

Please see my chart in the OP, you didn't get it early in Colorado, the wave still hasn't really hit yet. Also remember that this is a vicious cycle, i.e. people lose homes to foreclosure, go bankrupt, hurts the banks and realtors and mortgage brokers and home builders as prices plummet, so they lose jobs, which translates to more foreclosures and less spending in other areas of the economy, which leads to . . . do you see where I'm going with this? Its the mother of all snowball effects.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">Other good news is that even though the stock markets will probably suffer, precious metals and money markets will do well, as they did in the late 70's. In 1980 gold hit almost $1000 per ounce and a basic savings account was paying over 5%. Money markets and CDs were in the double digit range.</TD></TR></TABLE>

MM managers have been buying CDOs and MBSs, buyer beware. Gold is poised for a HUGE breakout, the dollar is fubar though.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">Moral of the story, it might be time to think about selling stocks and going to gold, CD's and money markets. Gold is already up over the last few years and it should keep climbing. I've read estimates that suggest it might hit $2000 an ounce in the next five years.</TD></TR></TABLE>

See above.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">We're headed for some rough times, that's for sure. I don't see us heading towards another great Depression with mile long soup lines and thousands living in boxes in Central Park and in front of the Washington Monument though.
</TD></TR></TABLE>

I do, at least the gov't will have the food to provide for the masses . . . . I hope.

[newt2]

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">This country's economy is no longer production and industrial based like it was in the past though. Everything is about consumption and services, much of which has been bought with credit or HELOC money . . . . . so take away the equity and the easy access to credit and the house of cards crumbles.</TD></TR></TABLE>

It's not that cut and dry. There's still manufacturing in this country and the further the dollar drops the more of it will come back. Government is a strong sector still and should increase as repairing our outdated and dilapidated infrastructure becomes an increasing priority due to both the need for upgrades and the need for jobs programs.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">Did wages triple from 1997 through 2007? No. So yes, much of it was driven by exotic loans and cheap interest rates (2001-2006), all of which have disappeared. The crash in housing is going to continue through mid 2009.</TD></TR></TABLE>

The housing market didn't triple in most places since 1997 either. In a couple of markets sure most places no. Here in Colorado it's gone up roughly 30% in that time, with wages lagging slightly behind that. I bought my home in 1998 for 160,000. Today it's worth about 190,000. Next year I expect it will be worth about 180-185,000.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">Yes, people need a place to live, but if people can't afford to buy a home with a traditional fixed rate mortgage and 20% down then prices WILL drop. Why do you think millions are facing foreclosure? It’s because they had to do crazy loans like I mentioned in the OP to buy a house, which created artificial demand, which drove prices up like crazy. Take away the artificial demand and prices will return to the norm (1997 levelish from what I've read) which is about a 40% drop from the 2007 peak.</TD></TR></TABLE>

If it goes back to 1997 levels then worst case scenario for me is that it will be worth what I paid for it. I'll still have the equity I've paid off in terms of paying down the loan. It would suck, but it's survivable.

There will also still be FHA loans and other non-standard mortgages as well. The subprime and ARM mortgages need to go though.

I think what's going to happen is that the feds will cut rates again, the government will subsidize refis to keep people out of foreclosure and then there will be stronger regulatory legislation passed on the finance market to prevent this kind of nonsense from happening again. That's not going to fix the problem, but it will spread it out over time which will soften the blow.

To be honest I can't see why anyone would take an ARM when you could have got 5-5.25% fixed (mine's at 5 flat fixed), but they did. One might argue that the buyer should beware but when they don't and it takes the economy down with it, we have a good argument for regulation.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">Please see my chart in the OP, you didn't get it early in Colorado, the wave still hasn't really hit yet. </TD></TR></TABLE>

Incorrect. We're a bit of a different case here. We never had a bubble this decade. Our prices right now are the same or slightly less than they were in 1999. In some areas of the state it's worse already, particularly north of Denver. One person I work with has seen her home go from 195k to 160k in the last two years because on in every five homes in her area was under foreclosure. If you want to see what's going to happen nationwide, look at what's already happened here.

The ARM loans taken out in the end of the century have risen and that's why we led the country in foreclosures for the last three years. Anyone paying attention to the economy in Colorado should have seen us as a harbinger of things to come. Most of what I read here locally expects a 1-2% drop in prices over the next year followed by stability.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">Also remember that this is a vicious cycle, i.e. people lose homes to foreclosure, go bankrupt, hurts the banks and realtors and mortgage brokers and home builders as prices plummet, so they lose jobs, which translates to more foreclosures and less spending in other areas of the economy, which leads to . . . do you see where I'm going with this? Its the mother of all snowball effects.</TD></TR></TABLE>

Which is why the government needs to step in and slow the cycle. That's going to piss off a lot of the Presidents more conservative base, but he's got no real choice.

A lot of people are still going to lose their home, that’s for sure. Many of them by choice, because they'll simply refuse to make payments on a 1/4 million dollar loan to pay off a home that's worth 200 grand. Many others are just in too big of a home for their income already. That's going to make the hardest hit sector, at least in markets that still have reasonable home prices, the upper end of the market. Starter and moderately priced homes are going to hold steady as demand for them rises from people who realize they should have bought one to begin with.

[FrreeeBird]

Originally Posted by newt2

It's not that cut and dry. There's still manufacturing in this country and the further the dollar drops the more of it will come back. Government is a strong sector still and should increase as repairing our outdated and dilapidated infrastructure becomes an increasing priority due to both the need for upgrades and the need for jobs programs.

Tens of millions of manufacturing jobs are gone. Thats a fact. Manufacturing will comeback as the dollar drops, but that will take a long time and a huge drop. Government spending is going to get hit as tax revenues decline, or they'll just print money, hello hyperinflation.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">The housing market didn't triple in most places since 1997 either. In a couple of markets sure most places no. Here in Colorado it's gone up roughly 30% in that time, with wages lagging slightly behind that. I bought my home in 1998 for 160,000. Today it's worth about 190,000. Next year I expect it will be worth about 180-185,000.</TD></TR></TABLE>

Might be closer to 165,000 by 2009 though, and in many places it did double or tripple and anyone who bought in after 2005 is going to get screwed.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">If it goes back to 1997 levels then worst case scenario for me is that it will be worth what I paid for it. I'll still have the equity I've paid off in terms of paying down the loan. It would suck, but it's survivable.</TD></TR></TABLE>

For you, yes, but for others, it means disaster. And the effects go far beyond just surviving in terms of this housing bust, as i described in my OP.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">There will also still be FHA loans and other non-standard mortgages as well. The subprime and ARM mortgages need to go though.</TD></TR></TABLE>

Non-standard mortgages have almost disapeared.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">I think what's going to happen is that the feds will cut rates again, the government will subsidize refis to keep people out of foreclosure and then there will be stronger regulatory legislation passed on the finance market to prevent this kind of nonsense from happening again. That's not going to fix the problem, but it will spread it out over time which will soften the blow.</TD></TR></TABLE>

Even if the feds cut the rate it won't do crap, the issues arising are far beyond the feds control.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">To be honest I can't see why anyone would take an ARM when you could have got 5-5.25% fixed (mine's at 5 flat fixed), but they did. One might argue that the buyer should beware but when they don't and it takes the economy down with it, we have a good argument for regulation.</TD></TR></TABLE>

Agreed.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">Incorrect. We're a bit of a different case here. We never had a bubble this decade. Our prices right now are the same or slightly less than they were in 1999. In some areas of the state it's worse already, particularly north of Denver. One person I work with has seen her home go from 195k to 160k in the last two years because on in every five homes in her area was under foreclosure. If you want to see what's going to happen nationwide, look at what's already happened here.

The ARM loans taken out in the end of the century have risen and that's why we led the country in foreclosures for the last three years. Anyone paying attention to the economy in Colorado should have seen us as a harbinger of things to come. Most of what I read here locally expects a 1-2% drop in prices over the next year followed by stability.</TD></TR></TABLE>

Housing is not local though . . . . and the prices will be effected when the economy collapses.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">Which is why the government needs to step in and slow the cycle. That's going to piss off a lot of the Presidents more conservative base, but he's got no real choice.

A lot of people are still going to lose their home, that’s for sure. Many of them by choice, because they'll simply refuse to make payments on a 1/4 million dollar loan to pay off a home that's worth 200 grand. Many others are just in too big of a home for their income already. That's going to make the hardest hit sector, at least in markets that still have reasonable home prices, the upper end of the market. Starter and moderately priced homes are going to hold steady as demand for them rises from people who realize they should have bought one to begin with.
</TD></TR></TABLE>

The gov't can't afford to pay for a war, how can they fund a multi trillion dollar bailout? The only way is to print and hyperinflate.

[FrreeeBird]

Foreclosures jump at a tripple digit rate in 11 states year over year

Northern Rock Bank of England almost fails, saved by UK Central Bank

[Matgallis]

Good reading so far. I agree with freebird that this crisis is a lot like a combo of 1929, 1987 and 1997. All with unique features, but not all the same.

1929 is unique for it had huge market declines and bank runs following it. Money crisis during deflation sound familiar? hmmmmmmmmm

Speculation in 1929 isn't exactly cut and dry like most people think. People during this time took out loans, risky ones, and simply rolled them over into stocks. The fundamental value of these stocks they were purchasing were on the higher side, but the inventions and progress of the years before were OUTSTANDING. The best part was only 5% of the population owned stocks Here's a timeline



The problem was there wasn't any regulation on how much you could "margin" (it wasn't margin then) and some people put everything they could into the market. Once the market began a small correction these loafty loans became vulerable and loan-calls were sent out. A loan call will force the stock-holder to sell his security at ANY price so the bank can get their orginal amount back. This starts a vicious cycle because each loan call makes the price just that much lower which induces someone elses loan call. Banks begin taking loses on their loans, the federal reserve FAILED at being the lender of last resort at this point and the famous bank runs began.

Sound familar? No? CDO's + hedgefunds anyone? A CDO is a asset-backed bond, usually mortage loans, that act like a bond BUT can be used as collateral for buying, selling other things on margins, or in more reality huge leverage. So the connection here to 1929 and now is there was really little regulation on loans. for sepculation and investment The loanees take out any loan they can get, barely make it and when the first hiccup comes along in the market they're forced to sell for a dozen of different reasons.

when this happen repeatively over and over those CDO's begin to lose value and that nice leverage the hedge fund has starts feeling the pain. They're forced to sell assets, find new CDo's (if they're even there HA) and they take steep loses on their books and sometimes become history. What happened recently was some of these CDO's BECAME WORTHLESS. So a few billion dollar (par) in CDO's became nothing. The problem is these hedge funds are leverages to the max 100:1 for example.


1987 is a housing job slump and 1997 was a tech bubble. Each is unique but related to the present.

[FrreeeBird]

Originally Posted by Matgallis

Good reading so far. I agree with freebird that this crisis is a lot like a combo of 1929, 1987 and 1997. All with unique features, but not all the same.

1929 is unique for it had huge market declines and bank runs following it. Money crisis during deflation sound familiar? hmmmmmmmmm

Exactly, we're going to get both this time too, though apparently the runs on banks are already starting in England . . . . the markets keep on fooling themselves into thinking the fed will definately cut rates and that housing isn't going to effect the economy and corporate profits . . . when the fed doesn't cut rate you can bet your ass there will be a 1000-1500 point drop over the next few sessions.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">Speculation in 1929 isn't exactly cut and dry like most people think. People during this time took out loans, risky ones, and simply rolled them over into stocks. The fundamental value of these stocks they were purchasing were on the higher side, but the inventions and progress of the years before were OUTSTANDING. The best part was only 5% of the population owned stocks Here's a timeline

</TD></TR></TABLE>

Nice, the scary part is much more than 5% own a home, or a bought a home since 2003 . . . . and we havent had big time inventions leading up to this run up.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">The problem was there wasn't any regulation on how much you could "margin" (it wasn't margin then) and some people put everything they could into the market. Once the market began a small correction these loafty loans became vulerable and loan-calls were sent out. A loan call will force the stock-holder to sell his security at ANY price so the bank can get their orginal amount back. This starts a vicious cycle because each loan call makes the price just that much lower which induces someone elses loan call. Banks begin taking loses on their loans, the federal reserve FAILED at being the lender of last resort at this point and the famous bank runs began.

Sound familar? No? CDO's + hedgefunds anyone? A CDO is a asset-backed bond, usually mortage loans, that act like a bond BUT can be used as collateral for buying, selling other things on margins, or in more reality huge leverage. So the connection here to 1929 and now is there was really little regulation on loans. for sepculation and investment The loanees take out any loan they can get, barely make it and when the first hiccup comes along in the market they're forced to sell for a dozen of different reasons.

when this happen repeatively over and over those CDO's begin to lose value and that nice leverage the hedge fund has starts feeling the pain. They're forced to sell assets, find new CDo's (if they're even there HA) and they take steep loses on their books and sometimes become history. What happened recently was some of these CDO's BECAME WORTHLESS. So a few billion dollar (par) in CDO's became nothing. The problem is these hedge funds are leverages to the max 100:1 for example.</TD></TR></TABLE>

Bingo.

<TABLE WIDTH="90%" CELLSPACING=0 CELLPADDING=0 ALIGN=CENTER><TR><TD>Quote &raquo;</TD></TR><TR><TD CLASS="quote">1987 is a housing job slump and 1997 was a tech bubble. Each is unique but related to the present.</TD></TR></TABLE>

1837 crisis too, according to greenspan . . . but apparently hes a bubble blowing idiot, so take that with a grain of salt i suppose.

[FrreeeBird]

Greenspan says housing is due for a big crash, northern rock crisis getting worse, hold on to your hats ladies and gentlemen.

edits:

http://www.countercurrents.org/whitney150907.htm
http://observer.guardian.co.uk....html
http://www.ft.com/cms/s/0/3120....html

I was right two months ago, its all going to come crashing down.


Modified by FrreeeBird at 12:17 AM 9/17/2007

[Matgallis]

Freebird what is your course of action to protect your assets?

[FrreeeBird]

Gold, and puts on the s&p expiring in november.