Altstry Responds to Demon
If you have serious concerns with her analysis would love to see you email her and what her response would be (as opposed to just ranting about it on a blog).
First of all, I don't pay for Ivy's work and she owes me no direct obligation. Just as I don't pay the salary of a professional athlete, he/she owes me no justification for quality of play.
Second, my ranting comes from not just a analysis of the analysts, but also an analysis of the press, corporations, and government. During these times, it seems like the whole system is letting us down in terms of reporting fully and fairly. If we don't speak up, who will? Our children and under what circumstances?
The problem we are currently facing was evident to me three years ago. You can't lever up a nation, make it dependant on credit to exist, and simply cut the system off. The consequences are becoming and will be dire. Further, the more you leverage, the more painful the unwinding and we are very very leveraged right now.
This board gives us a forum to exchange information. It is true capitalism. Those that provide information of value will be read and those that don't will be singing in a vacum.
As you can tell, I have chosen to focus on housing because it is the largest asset class in America. It is also responsible for a sigificant amount of debt in our country. If you add outstanding debt to value of homes, we are approaching $35 Trillion dollars. Nothing comes close.
I have chosen SPF as my example of corporate example because it is so easy to give the reader concrete evididence of the behavior. It is the most leveraged major public HB and the representations by management of simply amazing as evidenced by the recent firing of the CEO.
Ivy is the analyst because she is the one being quoted in the press lately. Analyst de jour if you will. It used to be Steven Kim. I am gender nuetral in my approach and have no bias. As far as the press, the list is endless for the nonsensical reporting. The AP headline below is a perfect example. Home sales UP when y/y home sales are DOWN?
We are approaching a very dangerous time in our country's history. Access to credit is drying up for many Americans. Thousands of mortgage companies have shut down over the past year. Many companies that provided student loan funding have stopped. Local banks are in trouble and starting to fail.
But it is not only individuals, access to credit is drying up for municipalities as well. Just take a look at the auction rate market and a few other material municipal debt classes. Not only that, it is drying up at a time when revenues for many governments are slowing. The only place that seems to have increased access to credit is some of our finanicial institutions.
All of this at a time when our nation is the most leveraged in its history. For the first time ever, the debt on the average American home is more than the equity. Our municipalities and state goverments are carrying historically high debt. Our banks and financial institutions are as leveraged as ever.
Now the defaults are just beginning. As credit is tightened further, the defaults will continue to increase. This early in the cycle we are seeing record foreclosures, municipalities on the verge of bankruptcy, and some of our nations largest financial institutions collapse.
Serious discussion about this seems to be absent. Our banking system encouraged this reckless behavior on by all parties.
The amazing part is that all of the solutions seem to be directed at the balance sheet, or existing debt if you will. Very little is being done to the income side of the equation. A six hundred dollar check simply won't suffice. If you do not address income, defaults will inevitibly continue to rise causing distress that our nation has never seen before.
The $$$ defaults already exceed the S&L crisis and income to our nations individuals, corporations, and municipalities is declining.
CAN YOU IMAGINE WHERE THINGS WILL BE IN JUST A FEW MONTHS?
Yes I have been a little hard on Ivy. But she is the one getting press and delivering the kool-aid messages de jour. The contraction of credit and rising defaults is a very important issue. It could destroy our nations economy. If as Americans we don't address it right now, our children may never get the chance for their turn at bat.
This response is a little heavy, but it is a very heavy issue. Thanks for keeping things in perspective.