Ok, I’ve not got an economics degree, but I’m fairly confident I’m smarter than this guy:
Douglas Duncan, the chief economist for the Mortgage Bankers, said the rates would probably rise further for much of this year as house prices fall further and banks and investors remain unwilling to lend and buy mortgage securities.
“We don’t expect to see the peak in delinquencies and foreclosure until mid- to late 2008,” he said in a conference call.
So, some simple calendar math: ARM (Adjustable Rate Mortgages) became popular in 2000/2001 …. Lots of people got them. Most of these were 7 year ARM loans. The number of these loans sold increased year over year until 2007. So, for Mr. Duncan, you’re looking at 6 or so more years of this. That means, you will hit the peak around 2012/13/14 or so (because there’s also a few 2 and 3 year ARMs in there, but those were more for “Prime” borrowers.)
Ok – now it’s in print – Here is my crystal ball prediction: FUCKED UP! Or, Really Great Depression (give it about 3 years) For the first time in a very very very long time (perhaps, ever), the Swiss franc is nearly on par with the dollar and the Canadian dollar is worth more than the US dollar. Since I’ve been in CH, I’ve watched the dollar lose about 20% of it’s value against the Franc. That’s 8 months. If that’s not a slide, I don’t know what is. Especially given that 7 years ago today, the dollar was 40% stronger than the Franc – it took 6.5 years to get the dollar down to 20% against the Franc, and only 8 months to erase that lead. So, the word tumble comes to mind.
What I think is particularly funny (sorry for those still living in the US) is how everyone at the top is running around flapping papers around their head saying, “Don’t worry, it’s a minor slowdown, it’s just a hiccup, it’s nothing to fret over.” Well, if I were still in the states, I would be worrying like a motherfucker.
Here’s the gist of it … the boom from Clinton wasn’t due to some magic by Greenspan, or some wit or charm from the Headmaster, himself – it was because he cut military spending by nearly 20% which freed up 12.5% of the US GDP for other things. The other things happened to be the Technology Boom, but … that’s another story. So, in the mean time, we’ve done the same thing the USSR did when it effectively went out of business – Get Bogged Down In An Unwinnable War that takes way more money out of the economy than it puts back in. So, [one more correction for the recordbooks] Regan did not do anything to “win” the cold-war; instead the USSR lost to Afghanistan, and oddly enough, so are we. Hmmm…. pattern here?
Well, not to be too negative – I’ve some advise to offer the next president: Cut & Run like a thief in the night. Cut the military budget by about 75% (and do it quickly so the pain doesn’t linger) and start funding the hell out of infrastructure development, community development, etc.
Oh, and for some low hanging fruit (which no one has spoken about) – just write a law that says ARM loans are now fixed rate and the length of the loan will be calculated by the principal left, the fixed interest rate, etc. You notice that no one seemed to have much problem paying the loan they’d originally gotten for the last 7 years? Exactly. So, just give them the same rates and this will stop the housing market collapse.
I’m always impressed with the idiocy of the ex-spurts…. er, experts.
Oh, something else funny in that story:
While many of the loans made to people with blemished, or subprime, credit were past due or in foreclosure, the number of prime adjustable-rate loans also rose rapidly to 8.1 percent from 4.3 percent in December 2006.
So, it’s not just those worthless no-good poor people that are causing problems, eh? It’s not a “Sub-Prime” crisis – it’s a Greedy Motherfucker Crisis.
Zactly.