INVESTORS are not prepared to handle market shocks and greater market volatility which could shake the
derivatives markets to the core. It is conceivable that the lines at Northern Rock (with the public clamoring for their
money) could spread.
The bottom line is most of the investing world, and the various market analyses, don’t take into account the massive
market management in the US. AS A RESULT, it is very likely that no matter what the FED does, the market won’t like it
for long … because the problems are TOO BIG right now for simple solutions. It is going to take a wringing out of the
excesses and mis-investments. There must be pain BEFORE gain.
In the meantime the liquidity injections will continue everywhere and gold will be the beneficiary.
____________________________________________________
How big a problem can the mortgage/housing mess in the US become?
My assistant is a very frugal, responsible, and hard-working person in his early thirties. He has a wife and one-year-old
twins. His monthly mortgage payment is going up from $2900 to $4000 because of the terms of his original loan. His
original loan and this new one are interest only.
Even though he hasn’t missed a mortgage payment in 7 years and has impeccable credit, they are forcing him to:
1) do automatic withdrawal for the mortgage payment
2) come in with 8 months worth of property taxes
3) have an impound account for taxes/insurance
4) prove that he never pulled any money out of his HELOC for the past year.
Our employer withdrew all gas credit cards (which have been provided to our sales staff for 35 years), leaving him with
an additional $400 in gas expenses.
In one month, he has an additional $1500 of living/gas expenses.
_________________
Having opposed regulating them, Greenspan blames derivatives
Submitted by cpowell on 07:56PM ET Sunday, September 16, 2007. Section: Daily Dispatches
Greenspan Alert on US House Prices
By Krishna Guha
Financial Times, London
Monday, September 17, 2007
US house prices are likely to fall significantly from their present levels, Alan Greenspan has told the Financial Times,
admitting that there was a bubble in the US housing market.
In an interview ahead of the release on Monday of his widely-anticipated memoirs, the former chairman of the Federal
Reserve said the decline in house prices "is going to be larger than most people expect."
Click here to go back to our NEWS page...