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

To: UncleBigs who wrote (63595)	6/13/2006 7:03:55 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 110194

RE:"I think housing goes back to 2001/2002 levels over time." That will be painful. Then again, few complained on the way up.

To: UncleBigs who wrote (63595)	6/14/2006 1:34:57 AM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

Housing gets decimated by much higher long term rates and (or) much tighter lending standards.. The fact that 'if you can fog a mirror' or 'live in the US and can chew bubble gum' you qualify for a HELOC or option ARM with no equity even though the yield curve has been flat to inverted of late tells you something.

To: UncleBigs who wrote (63595)	6/14/2006 9:50:20 AM
From: Tommaso	Respond to of 110194

>>>The money lost goes to money heaven. It doesn't go anywhere else. It just goes up in smoke.<<< Someone got paid when the house got built or sold, and someone owes any borrowed money to a creditor. If the mortgage payments are not made, the mortgage holder forecloses. If the mortgage holder cannot recover the loan by selling the property, then it must be written off as a loss, though I suppose there are ways to delay recogtnizing such losses. A loss reduces the capital of the mortgage holder and makes it more difficult to make further loans. This in itself could put upward pressure on interest rates. Also, lenders may become more cautious and require better security and higher downpayments. That reduces the demand for new or existing homes, and drives prices down further, providing more reasons for borrowers to default on their mortgages and give up their houses. Foreclosures therefore beget additional foreclosures as undercapitalized homeowners refuse to continue making payments on depreciating property. In many cases they simply cannot make the payments because their monthly bill has doubled as teaser rates expire and ARMS begin to adjust upwards. Sounds more like the money goes to money Hell than to money Heaven <G>.

To: UncleBigs who wrote (63595)	6/14/2006 10:06:48 AM
From: andiron	Read Replies (1) \| Respond to of 110194

""The money lost goes to money heaven. It doesn't go anywhere else. It just goes up in smoke"" I am not an economist/in finance. But it is often a matter of debate (for ex in media) as to "where did the money go? whenever an asset falls. that is: common perception is x,y,z asset fall = a,b,c asset rise+cash i know this is not correct (not even close?). And asset lost many times, is just vaporized. And i think complex financial instruments are the reasons why it is so. But i am not completely clear on this either. could someone shed light on this.