Archive for March, 2007

March 13, 2007

The Dam Has cracked in the Housing Market

Thomas G. Brown |

This problem was brewing for several years now. I am not sure how large firms missed the signs. This is just the tip of the iceberg and I see financial companies, the sub-prime, and general mortgage firms as the first to go down it this domino effect recession. As I type this a CNBC talking head is rambling about GMAC reworking it guidelines for mortgages by tightening it’s qualifications. Apparently they are going to take a hit form their mortgage arm of the company. Sadly, folks on the TV shows and the government “cheerleaders” known as the Federal Reserve are stating that despite the housing bubble starting to pop our economy will be fine. Some clown even stated people will still be able to spend, spend, spend an keep our economy running smoothly. I guess what he means is that we will continue to ship truckloads of useless paper money to China and others in return for goods they manufacture. Dollars which are financed by China and others. Unfortunately Americans can’t continue to spend money like a drunken saylor. When I thing of the US eonomy and the current state of the housing market I am reminded of a song by Ozzie Osborne “Crazy Train”.
I find it highly suspicous that February’s report by the S&P about retail sales being lack luster and a few days later the mortgage market starts to fall apart. The retail industry stated “the cold weather kept shoppers away”. I’m not sure if this is true or not…but I find it strange that a few days after this report the sub prime mortgage market implodes.
Warren Buffet pointed out in an interview today that the fall in the industries related to home building are going to be effected. The contractors, lumber yards, developers, real estate agents are all going to be effected. Sadly I see many are going to see a pink slip on there desk in the future. The Fed is probably going to lower interest rates again in an attempt to slow the start of what will be a multi year housing crash. This may act as a sandbag at a weakened levee. But sooner or later the dam will break. In addition the Fed will have weakened our fiat dollar yet again. This market is really interesting to watch and I’ll be watching to see what happens next. Until next time ladies and gents….Have a good one!!!

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