The Great Unraveling
March 16, 2007
By Stephen S. Roach | from Beijing
http://www.morganstanley.com/views/gef/ ... atrick.net
This is a good article on the possible effects of the housing collapse and Greenspan's role in it.
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The Great Unraveling
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The Great Unraveling
by Newsseeker » Tue 20 Mar 2007, 09:44:20
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Re: The Great Unraveling
by Petrodollar » Tue 20 Mar 2007, 10:17:04
...speaking of a possible housing market collaspe in the U.S., this is a rather somber article about the once formidable city that epitomized US industrial might in much of the 20th century (essentially from the 1910s through the early 1980s)
Detroit, home of the U.S. automobile giants, is now a place where many houses are apparently cheaper than cars. I think it safe to say this is what a housing implosion looks like. Its tragic.
http://news.yahoo.com/s/nm/20070319/ts_ ... detroit_dc
Houses cheaper than cars in Detroit
By Kevin Krolicki
Mon Mar 19, 11:48 AM ET
(excerpt)
$this->bbcode_second_pass_quote('', '.')..After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: "The lumber in the house is worth more than that!"
As Detroit reels from job losses in the U.S. auto industry, the depressed city has emerged as a boomtown in one area: foreclosed property.
It also stands as a case study in the economic pain from a housing bust as analysts consider whether a developing crisis in mortgages to high-risk borrowers will trigger a slowdown in the broader U.S. economy.
Detroit, home of the U.S. automobile giants, is now a place where many houses are apparently cheaper than cars. I think it safe to say this is what a housing implosion looks like. Its tragic.
http://news.yahoo.com/s/nm/20070319/ts_ ... detroit_dc
Houses cheaper than cars in Detroit
By Kevin Krolicki
Mon Mar 19, 11:48 AM ET
(excerpt)
$this->bbcode_second_pass_quote('', '.')..After selling house after house in the Motor City for less than the $29,000 it costs to buy the average new car, the auctioneer tried a new line: "The lumber in the house is worth more than that!"
As Detroit reels from job losses in the U.S. auto industry, the depressed city has emerged as a boomtown in one area: foreclosed property.
It also stands as a case study in the economic pain from a housing bust as analysts consider whether a developing crisis in mortgages to high-risk borrowers will trigger a slowdown in the broader U.S. economy.
(more)
$this->bbcode_second_pass_quote('', 'D')etroit, where unemployment runs near 14 percent and a third of the population lives in poverty, leads the nation in new foreclosure filings, according to tracking service RealtyTrac.
With large swaths of the city now abandoned, banks are reclaiming and reselling Detroit homes from buyers who can no longer afford payments at seven times the national rate.
Michigan was the only state to see home prices fall in 2006. The national average price rose almost 6 percent but prices slipped 0.4 percent here, according to a federal study.
The state's jobless rate of 7.1 percent in January was also the second highest in the nation, behind only Mississippi.
(tragic commentary on this once thriving suburban city)
$this->bbcode_second_pass_quote('', 'R')ealtor Ron Walraven had a three-bedroom house in the suburb of Bloomfield Hills that had listed for $525,000 sell for just $130,000 at the auction.
"Once we've seen the last person leave Michigan, then I think we'll be able to say we've seen the bottom," he said.
...Here's the WP article of the day re the "Great Mortgage Meltdown of 2007"...
http://www.washingtonpost.com/wp-dyn/co ... 01054.html
$this->bbcode_second_pass_quote('', '[')b]The Pros, Getting Conned
A Financial Meltdown, Courtesy of the Big Boys
By Sebastian Mallaby
Monday, March 19, 2007; Page A15
The Great Mortgage Meltdown of 2007 recalls the beginning of the dot-com implosion in 2000. Once again, paper wealth is going up in smoke; once again, Wall Street banks that created the dud securities turn out to have been imperfect guides as to their value. But the current financial meltdown also differs importantly from the tech bust.
The danger is that Congress will see only part of this distinction.
...here's their contrast of the dot.com implosion vs. the mortgage implosion....
$this->bbcode_second_pass_quote('', 'J')ust as the financial actors in this drama contrast with the day traders of the tech bust, so, too, its real-world victims could hardly be more different. In the wake of the dot-com bomb, it was mainly bright young adventurers who were thrown out of work -- and most of them found new jobs a half-dozen lattes later. The mood of the era was summed up by an advertisement in a sports club window: "Hey, dot-comers, look good when you lose your shirt," it teased, as though the giant tech pop were a dating opportunity.
There's no fodder for advertising laughs in the mortgage debacle. Many of the liar loans and exploding ARMs were extended to low-income families, who now can't meet their payments and face the prospect of eviction. According to the Center for Responsible Lending, one in 10 recent home buyers who are black will lose their properties, 2 1/2 times the likely rate for whites.
If even sophisticated financiers make unrepayable loans, and if the victims of this craziness are families who are too weak to take a blow, perhaps the sophisticates should be reined in by regulation?
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