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Strategies & Market Trends : Galapagos Islands
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To: Jorj X Mckie who started this subject1/6/2004 10:40:18 AM
From: zonder  Read Replies (4) of 57110
 
Happy new year, all. I thought you would be interested in the latest Belkin Report (out yesterday) titled 2004 Forecast - US Housing Slump.

Belkin makes a brief case for lower new home and existing home sales coupled with persistent high housing starts - i.e. falling house prices. And then goes on to say:

"Financial institutions that have milked the housing boom (mortgage lenders, consumer finance, Fannie, Freddie, etc) should stumble this year as homeowners fal behind on payments for houses they cannot afford - and begin to mail back the keys."

My personal favourite is the following paragraph:

"Why is a US housing downturn such a threat to financial markets? Simply because it is the asset bubble inflated by the mad hatters at the Fed and in Washington DC to replace the loss of wealth from the collapse of the previous bubble they inflated (Nasdaq 2000). Their strategy of replacing one deflated bubble with another based on artificially low interest rates and excessive mortgage credit was a short term fix to a long term problem. The authorities dodged a depression. But they treated withdrawal from heroin addiction (Naz) with a new addiction to cocaine (homes). US consumers felt great (despite their collapsed tech stock portfolios) while their houses appreciated. They nonchalantly withdrew home equity via refinance offers thrust on them by mortgage lenders, who offloaded their loans to Fannie Mae. Consumer spending held up during the recession - and demand for goods was transmitted through the trade deficit to low cost producers in Asia. So the global economy rests on the back of the overleveraged US homeowner, who is rolling the dice with borrowed money shoved on him by Uncle Al and Aunt Fannie. Therefore, US housing market distress could pull the rug out from under the global economy."
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