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

To: ild who wrote (36975)	7/26/2005 10:35:44 AM
From: Ramsey Su	Read Replies (1) \| Respond to of 110194

biz.yahoo.com this is a very interesting product to counter piggyback competition. It is also a tangible amount that homebuilders can use to keep home prices up while actually rebating costs to buyers pretty much same as the auto industry. This is equivalent to a interest rate buy down of old. The only difference being that this is specifically targeting the segment with no or little downpayment. In my opinion, this zero equity trend is very bad and here is why. A zero equity type of homeowner/borrower/investor/whatever has only one thing of value, their credit which is presumably supported by their ability and their willingness to repay their debts. It they runs into trouble, their only thing of value, their FICO score, is going straight down anyway. They are now put in a situation that they have nothing to lose!!!! Why bother paying property taxes? Why bother paying insurance, let the lender slam those ridiculously priced policies. Mortgage payments? Forget it. HOA dues, if any, dream on. A sophisticated borrower can drag this on easily for 6 months or more without filing BK. In borrower friendly states such as New Jersey, probably over a year. In the mean time, enjoy possession of the property totally free with only utilities to pay. In fact, some municipalities are not even allowed to shut off your utilities for non payment. Just tell them you got elderlies or children in the house and you would sue if they die of thirst or cannot run the air conditioner. The difference between this round and previous cycles is the number of these low/no down loans. They all start with negative equity and could only get worse from there if property value do not continue to go up. As for their credit, within a couple of years, they will no longer be classified as the deadbeat they are, but rather "victims" of a bad economy cycle. This is going to be ugly.

To: ild who wrote (36975)	7/26/2005 12:17:12 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Tue Jul 26 2005 11:54 trotsky (Brazilian real) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the real carry trade has hit a major road bump in recent days...this is a potential warning shot regarding the entire emerging market 'hot money' flows that have marked the 'reflation' period since mid '02. Date: Tue Jul 26 2005 11:10 trotsky (Guardian article on Niger) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i've noticed this little inaccuracy: "Unlike countries such as Nigeria that uses its massive oil revenues to import food, Niger's economy of only $9bn ( £5.15bn ) depends on its main export, uranium, whose value has decreased dramatically since the nuclear arms race in the 1980s." uranium prices are in fact at a multi-decade high. the question is now, how believable are the other statistics offered in the article? it seems astonishing that a country with a population of only 11 million which has such a valuable export business should suffer such a big crisis. a comparable African country would be Botswana - also largely a desert, with a small population and a valuable export business ( diamonds in this case ) . there's never been a food or economic crisis in Botswana. now, i've been to Botswana, and the one thing that makes this country different from most of sub-Saharan Africa is the lack of corruption. apparently civil servants are well paid and don't feel the need to take bribes. my guess is that Niger conforms more to the usual African practices, which would help to explain why it is so crisis prone.