Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (13869)	1/26/2007 7:02:49 PM
From: TobagoJack	Read Replies (1) \| Respond to of 218074

from today's fleck, via a threader from elsewhere, continuing a theme we chatted about yesterday, about rot and how it tends to spread, and when system-wide via everyone's hedge, will likely poison everybody, killing off the weak, and weakening the strong ... dangling spectacle is straight ahead, for the noose is ... ew ... cannot look When ABS Brakes Fail ABX Swaps As a counterpoint to the current backdrop of complacency, I would like to share some comments from my friend in the dark-matter world. In an email to me, he pointed out that in the last couple days, the ABX subprime credit-default swap (which I've commented on a couple times) has -- in his words -- "blown out" 20% to 600 basis points in the last two days, up from about 250 basis points last fall. Rot Rising to the Surface Of course, the carnage in the subprime sector has not really affected the rest of the food chain yet (witness today's bid in the financials). However, my friend in the subprime business said that WMC Mortgage, a wholly owned subsidiary of GE, is laying off 35% of its workforce, taking a $100 million charge, and cutting back on its writing of loans. But here is the important point to note: "They are going to get rid of all 100% financing on all borrowers below 700 FICO. Also, [there will be a ] 95% cap on first-time homebuyers. All we talked about is coming to a head. Now watch the homebuilders suffer." (Interestingly enough, after I received his email yesterday, the homebuilders did indeed suffer, though as I noted already, initially today they were mixed.) Thus, it does appear that the noose around the housing ATM is continuing to tighten, if ever so slowly.