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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 14 4:00 PM EST

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To: The Street who wrote (65530)	12/31/2000 10:57:41 AM
From: Haim R. Branisteanu	Read Replies (1) of 99985

Real estate was strong until 1989 and did not started to recover until 1994, arriving at 1989 price parity in dollars only in 1998 and overshoot that price by over 25% on average in summer of 2000. With 75% to 85% financing it is a highly leveraged transaction similar to financial futures and a slight softness will snowball prices lower. Only getting back to parity price will find many loans in technical defaults. Only lower interest rates could rethinkle the refi market and avoid defaults. The FED is playing with fire at this juncture as the RE is the most valuable asset in the US and also the most leveraged. Their mistake was a year ago wen they opened the flood gates to money and forced every other CB in the world to do the same. stls.frb.org The S&L debacle and later the RTC was a direct result of the FED rising rates in front of un-responsible lending practices. Now those CMS and MBS are the backbone of many pension funds and anuities and it is dangerous. BWDIK Haim

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