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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Bucky Katt who wrote (214)	6/18/1998 12:10:00 PM
From: Oeconomicus	Read Replies (1) of 3536

WJ, "dead debt"? LOL. I really should have taken Latin. Regarding the 125% mortgages, I agree that that phenomenon could present a problem if a recession leads to an inability to service the debts. Then, defaults could lead to further pressure on R/E values as properties are liquidated and lenders tighten their credit requirements. However, consider two mitigating factors. First, I don't see a lot of people just walking away from their homes, even if, on paper, they have no equity. Second, with long-term fixed rates at pretty low levels, the likelihood of payment defaults is much less than if we were going into a recession with everyone sitting on 10% or higher mortgages. Just some thoughts, relevant or not. Regards, Bob

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