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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (27149)	2/24/2005 2:32:29 PM
From: John Vosilla	Read Replies (2) \| Respond to of 110194

Ramsey speculation and easy money has driven the growth in many areas along with the multiplier effect which most people underestimate. More than likely it will end with tighter underwriting standards, a recession and a major back up in long rates. Just the leverage, hedging and derivative activity going by those who finance housing is pause for further concern that there will be a major blowup from a flattening yield curve this summer. Tightening bak spreads for the banks, increasing credit losses and less Fannie Mae liquidity will all make it more difficult for the banks to make any money in a few years. I see a repeat of 1990-94 as the best case scenario. I listened to that arrogant CEO of Toll yesterday. He said the only thing holding back all the demand is lack of supply. If this was not all an engineered plan in our new ownership society after the old economy went belly up then wages and rents would have kept up with housing prices. As it is housing generates a 1-3% operating cashreturn on investment (cap rate) these days in the coastal bubble markets. That is the bubble of all bubbles. We already have record foreclosures even in high growth areas like Dallas due to lack of appreciation and inability to do cash out refis like in CA,FL and the northeast.