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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (3829)	11/7/2001 4:28:26 PM
From: puborectalis	Read Replies (2) \| Respond to of 99280

relentless bear......the dynamics of the market have changed.

To: Softechie who wrote (3829)	11/7/2001 6:43:49 PM
From: pompsander	Respond to of 99280

Consumer Credit problems could really have whacked this economy four or five months ago. I was very concerned then, but am less so now....for the following reasons: 1. The Fed's continual rate dropping and pumping of excess liquidity has made the banks very healthy, and will continue to do so for months to come. Spreads are just great for the banks on loans of every type. It is like the good old days; borrow at 2.5. lend at 5.5, charge fees. 2. As a result, banks now have the flexibility to write off or restructure a lot of debt which would have totally screwed up their balance sheets a few months ago. They are doing this quietly. So are some of the prime lenders (MNBA, GE, etc.) 3. With the low end of the yield curve finally down, howeowners are being badgered into refinancing (not that it should require badgering). Banks will help the homeowners refi and then consolidate their consumer loans at the same time....and put money in the consumer pocket. Huge rush to the refi desks this past week, and more to come. Long bond at 4.80. Mortgage rates just too good to pass up. Freddie and Fannie ready to help out banks by buying up all those loans, securitizing them and selling them as beautiful Gov. agency paper.....now worth more because of fewer treasuries available. 4. The general mood is improving. This is important, as it governs decisionmaking. 5. My one fear in this area: The sub-prime lenders. Always a skanky bunch....may be in more trouble than originally thought and no easy way to help them bail themselves out.