Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (64556)	3/15/2007 3:04:15 PM
From: Haim R. Branisteanu	Read Replies (1) of 116555

Based of the wide spread noise related to the sub prime mortgages it seems, that may be, the crisis will end in a month or two. The airwaves are just to full with the “disaster” usually a sign of top or bottom. The mere fact that congress wants to step in and assist with legislation is also a sign that may be, it is over as congress never had or has foresight but looking for ways to gain quick political capital. For once we do not see all those private equity deal floating around any more - so may be all those billions of $$$ bought up the troubled mortgage packages already dissected them and refinanced them with regular bank loans For example if one bought a pool of $1 billion face value, at $750 million they easily financed them with $500 in bank loans. Those funds will hold the paper for a year until the mortgage market stabilize and sell them for $900 to $950 million. (a nice gain any way on $250 investment) Further there are billions upon billions of funds in foreign states managed funds who are rich in raw materials and oil producing companies looking for a investment, managed by the like of Deutsche Bank, Goldman etc. many got out of the treasuries and stock markets and into more risky dissected sub prime packages. They may be, exited the stock markets and bought those sub prime packages. How much funds exited the world financial markets? Well I think well above the amount of non performing mortgages in the US. Think about it!! In 1989 was the last top in RE it bottomed out in 92/93 to 3 to four years later. Today money velocity is several times faster so the bottom should come earlier and may Santa Claus arrived again and saved the day. One should remember – money is not what your government is printing and as such it has no intrinsic value – only perceived value – a house has intrinsic value and therefore printed money can save also this debacle.

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