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: oldirtybastard who wrote (21545)	8/23/2007 1:52:59 AM
From: elmatador	Respond to of 217588

Right now, U.S. mortgage debt outstanding is $10.5 trillion, supported by a capital base of $500 billion, which means the mortgage industry is leveraged 20-to-1, Miller says. He expects that leverage to decline to more like 15-to-1 to 13-to-1, putting it at $6.7 trillion to $7.5 trillion of assets supported by $500 billion in capital. The imbalance of up to $250 billion results from mortgage assets now being sold for a big discount. (Lehman) one of the biggest underwriters and sellers of mortgages and related securities, said Wednesday it is shutting down its BNC Mortgage division and axing 1,200 jobs "because of tumult in the home lending industry." forbes.com The ones selling first are lucky...

To: oldirtybastard who wrote (21545)	8/23/2007 5:48:35 AM
From: elmatador	Respond to of 217588

who holds those weak assets? Lenders know there are billions of dollars of weak assets out there, such as securities backed by foolish or fraudulent mortgages. What they don't know is who holds those weak assets. So when borrowers come to them offering suspect securities as collateral for a loan, the safest thing to say is no. When everyone says no at once, the result is a credit crunch that, if unabated, could cause a recession. FED cutting the largely symbolic discount rate on Aug. 17 hoped to calm nerves and return borrowing conditions to normal. Instead, conditions got worse. Terrified to hold anything but ultrasafe securities, investors stopped buying IOUs from corporations and poured their money into Treasuries. A reliable measure of panic—the difference in yields between safe and less-safe securities—widened to the biggest gap in more than 10 years. Five days later, markets remained severely impaired. businessweek.com Before, when it involved emerging marktes it was easy: Mexico would go down, Tequilla effect would spread to all LATAM, followed by flight for "quality" and everybody was happy. Now it is proving a bit difficult.