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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Smiling Bob who wrote (85875)	8/17/2007 11:38:46 AM
From: Live2Sail	Respond to of 306849

Countrywide may be just the first. The Fed knows that. I think that's too pessimistic. The Fed has looked into the primary bank holdings. Most have reduced their exposure to lending porn throughout the year. They're liquid (otherwise the FF wouldn't have dropped to 1% on Friday). The only bad apple is CountryWide. And they became more rotten by bringing their mortgages over from CFC. I had said that move was not innocuous. I think it was a move to force the Fed to do something. It would be really, really bad to lose a primary bank.

To: Smiling Bob who wrote (85875)	8/17/2007 11:51:36 AM
From: MulhollandDrive	Read Replies (2) \| Respond to of 306849

the fed is rightly concerned about the solvency and confidence in the banking system we may have a short term recovery in the financials, but i think the problem loans have just begun to surface and i'm dubious that even a .50 point cut will help... don't forget the effect on the dollar financials are leading the market higher, i don't expect that to last...once the bad loans actually hit their balance sheets, we'll know more about whether the carnage is priced in....recall that at the height of their bubble, japanese banks allowed bad loans to remain on their books for years and years, which only prolonged the pain, zero interest rates didn't help and only set up a massive carry trade that is only just now beginning to unwind the kind of financial disruptions we are seeing now is when everyone is on the same side of the trade, lots of fun while it works, when it stops, not so much<g>