Clown-Free Zone... sorry, no clowns allowed Message Board

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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: yard_man who wrote (194877)	10/2/2002 5:02:27 PM
From: reaper	Read Replies (2) of 436258

funny, i literally JUST finished reading his piece... his argument makes sense. basically, default risk and negative convexity (the right of the borrower to re-finance, or not) means that you'd have to be on drugs to loan money to a home-owner on a 30-year basis at much less than 5.0%. his argument was in a context of the re-finance wave being basically over; although short rates and govies might keep going down, rates to consumers for mortgages will not. for this reason he thinks the economy might be in trouble, as the consumer will be out of firepower before corporate capex starts up again. Cheers

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