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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (22580)	2/1/2005 12:26:36 PM
From: ild	Read Replies (2) \| Respond to of 116555

Since all underwriting has been automated lenders have huge overcapacity. So idle personnel keep calling you. Second they probably offer you mortgages. Since we have reached a point with permanently high RE prices, lenders don't have much risk with loans secured by RE. Third you probably have very high FICO. The rest of their clientele may have deteriorating credit, so their computers keep pulling up you profile.

To: John Vosilla who wrote (22580)	2/1/2005 12:34:40 PM
From: KyrosL	Respond to of 116555

Lenders want to give you money for a very simple reason: they risk nothing, because they can quickly package the loans into "AAA" securities and pass them on to some Asians or some funds. But Elroy's contention that Fed funds rate increases mean nothing is simply untrue. My portfolio cash is yielding 2+ times more than what it yielded a year ago. That's not nothing. Of course, longer dated paper is not affected. The market, not the Fed controls longer dated bills, and for a number of reasons there is lots of demand for them.

To: John Vosilla who wrote (22580)	2/1/2005 1:32:26 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Surely not what I remember from the last tightening cycle in 1994. This tightening cycle is almost over. This is NOT 1994. That said, they are jumping all over each other to keep "earnings up". If defaults rise and new loans do not come piling in, earnings growth will fall and stocks will get hammered. How or why they do not see the risk in what they are doing is totally beyond me, but it is a competitive frenzy to get new loans now as if housing is never going to fall. As long as they keep making loans consumers will keep spending it. The party is over when a) there is no home equity left b) fear of a credit crunch set in c) lending standards tighten d) the home construction boom ends e) there is a significant and sustained turn down in jobs f) consumers simply refuse to take on more debt all of those will happen of course, which one starts the ball rolling has yet to be finalized Mish

To: John Vosilla who wrote (22580)	2/1/2005 1:49:04 PM
From: mishedlo	Respond to of 116555

Fiat Struggle Seen Headed for Settlement With postponed deadlines and secret meetings, Fiat SpA and General Motors Corp. have kept everyone guessing about the Italian group's option to force the U.S. carmaker to buy its troubled auto division. "GM's board was scheduled to meet Tuesday as well. A GM spokesman had no comment on that meeting or the Fiat situation. Gabriele Gambarova, a broker at Rasbank in Milan, put the figure GM would probably have to pay to buy its way out of the clause at about 1.7 billion euros ($2.2 billion), based on how much debt GM would avoid taking on if the put option were canceled. But Fiat might be able to push that sum higher. "Anything below 1.8 billion euros to 2 billion euros ($2.3 billion to$2.6 billion) should be seen as not sufficient for Fiat, i.e. as a disappointment," Juchemich said." tinyurl.com