John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: MulhollandDrive who wrote (8170)	8/26/2007 7:20:11 PM
From: Hawkmoon	Read Replies (1) of 33421

i don't....i expect significant number of home-owner wannabes back to renting (where they should have REMAINED until they came up with risk-mitigating down-payments..but alas, EZ credit circumvented that, right?).... How about the fact that most renters required credit checks for their leasees and that factor HEAVILY into the renter approval? There's no guarantee that they'll find someone who will rent to them if they have lousy credit scores caused by a mortagage default. Combine that with the fact that those people who default on their mortages will suddenly have tremendously low FICO scores and likely find their credit card limits drastically reduced, and rates increased, a situation that might cause them to default on their credit balances?? And all of this could initiate a similar consumer credit squeeze for those who have every means of making their payments, because all of those securititized CDOs backing that have been sold to the investor world could suddenly be perceived as "untouchable"... That the heavy handed way of deflating the credit bubble is not necessarily the only way. All bubbles should be deflated as gradually as possible so that wide-spread economic dislocation is mimimized. In sum, avoid tactics where investors throw out the baby with the bath water. That's the pragmatic way to handle this. Like the saying goes.. be careful what you ask for.. You might just get it. Hawk

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