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

To: Box-By-The-Riviera™ who wrote (108476)	3/8/2008 11:16:17 AM
From: saveslivesbyday	Read Replies (2) \| Respond to of 306849

"how's that sound???????" Sounds pretty bad, worse than anything Al Qaeda could have conjured up. Maybe that's why Marc Faber smiles so nervously

To: Box-By-The-Riviera™ who wrote (108476)	3/8/2008 12:37:19 PM
From: Jim Fleming	Read Replies (1) \| Respond to of 306849

Box re domino post Thanks. That is a much more digestible explanation of the derivative debacle than my attempts to to impress people with my economic expertise. Jim

To: Box-By-The-Riviera™ who wrote (108476)	3/8/2008 12:50:19 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 306849

Thanks a load dood, now I'll never be able to play dominoes again without getting a migraine!<G>

To: Box-By-The-Riviera™ who wrote (108476)	3/8/2008 12:55:44 PM
From: Pogeu Mahone	Read Replies (1) \| Respond to of 306849

Wow 11 Years you have been here. Great post. Please do it more often.

To: Box-By-The-Riviera™ who wrote (108476)	3/8/2008 1:18:45 PM
From: Broken_Clock	Read Replies (1) \| Respond to of 306849

For extra bonus points this round please answer the following: In the present day Domino Theory Society, which leader is scheduled to take the rap ala Nixon?

To: Box-By-The-Riviera™ who wrote (108476)	3/8/2008 2:28:28 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 306849

How about this analogy... One of the causes of the 1929 crash was the abuse of margin (upwards of 90% I recall reading) on existing stock positions. So one of the first things implemented to mitigate this was to limit margin ability to approx 30% to 50% of current equity (Fed requirement). So we all know if we want to purchase a stock, we have to pay cash for it, and then we're able to borrow up to 30-50% of that equity value from the broker to "juice" up our positions. But if the price of our stock goes down, we're requird to put up more money, or liquidate (at a loss) the amount needed to put us back within that 30% maintenance threshold. Now compare this this to the real-estate/mortgage markets. We used to be required to have 20% equity as a down-payment in our homes. Which effectively means we're purchasing that home on 80% margin. But then suddenly people were offering "piggy-back" loans to cover that 20% of "cash-down" required by the primary lender. NOW.. just imagine if this was how the stock market worked.. You go to your broker to borrow 80% on a stock position, and you borrow the other 20% from another broker.. Is it any wonder that people have reduced their equity in their houses to post-WWII lows?? After all, if the bank winds up owning the home, those people can still rent that (or another) property to live in.. The only derogatory impact they face is on their credit rating which they will no longer really need anyway since property values are declining and who wants to own a asset with diminishing value from year to year? Why not just rent (because there will be plenty of rental properties available as banks become property managers)??.. So, funny as it may sound, during the past 20 years+ legislative and financial policies have made it easier to purchase a house than to purchase a piece of paper that represents a proportion of ownership in a corporation. I could buy a place to live on 100% credit, but I can't buy a share of stock without paying cash on the barrel. Yeah.. I know.. houses are "real property" and they aren't making any more real-estate. But I think the comparison is still appropriate. And the ultimate scary thought is that, for those who have paid off their mortgages and own their homes outright, now face the prospect of seeing the value of their property decline right along with those who were purchased for 100% credit. Hawk

To: Box-By-The-Riviera™ who wrote (108476)	3/8/2008 6:45:27 PM
From: stan_hughes	Respond to of 306849

Outstanding, dude. Tip of the hat