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Clunk --- There goes prime

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August 07, 2008 – Comments (7)

Delinquencies for prime 2007 mortgages are up over 2006 mortgages.

The article says it suggests the housing and financial crisis is worse then originally thought.

I bet for caps players, well, I bet that statement isn't true.  I bet being on caps many investors here have come to realise much earlier than most that the financial crisis is much more serious then most realise.

7 Comments – Post Your Own

#1) On August 07, 2008 at 11:52 AM, REITDUDE (91.16) wrote:

yep.  thanks to you and the other tops who blog often, I've avoided thousands of dollars in losses in MRL portfolio by avoiding the financials, holding SKF & getting over my fear of shorting. 

It seems like every day there's a new headline calling an end to the recession due to a the latest writeoff/capital rasining/govt intervention- hearing the logical, consistent opinions of intelligent folks with proven track records on caps call BS is what's kept me (almost) out of the red this year.

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#2) On August 07, 2008 at 12:23 PM, dwot (65.40) wrote:

Glad to hear that reitdude.

Big Picture has links to some good interviews with David Rosenberg.

I liked his comment, "I lived through the 80s."  I took that to mean the economics of the day gave him challenges as well.  Those challenges, which in my mind were extremely harsh.  I really didn't understand what was happening then, but I do now and it is the same cycle, only I suspect this one is going to hurt a lot more people.  In Vancouver I think it mostly hurt young people and I think it has truly been unrecognized the degree to which it hurt young people. 

I had an email from a 41 year old friend hoping the real estate market cuts back enough in order to get in.  In the 80s cycle many 41 year olds had their homes paid for.   I worked in a bank.  I saw 30-something year olds paying off their home.  This time it is going to be so much worse and hurt will not go unrecognized. 

At 41 there are still those that were hurt by that cycle that still simply have never recovered, and I mean in the sense that when I was growing up I was taught that if you do the right things then by your 40s you should be comfortable, have your home and not much mortgage left.  That foundation going into the last down turn isn't there this time.  This time many in an age range that were comfortable last time are already struggling. Certainly there are places where life is comfortable, but the number of people where it isn't is simply a lot higher.

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#3) On August 07, 2008 at 12:33 PM, DemonDoug (81.94) wrote:

Somewhere in CAPS I remember writing in the middle of 2007 about how the thing that was the most mind-boggling and most shameful was all of the liar loans/fraud lending that was happening in the 1st quarter of 2007.  Might have been on a pitch, but I can't seem to find it.  The "credit crunch" the media talks about puts the anniversary in august, but anyone who has a freakin clue can remember that New Century really kicked off the entire domino chain back in 2/07, and it was clear by the 2nd quarter that the ponzi game was over; the fact that people were dumb enough to buy RE and the fact that banks were still lending lots of loans at inflated values with little documentation is downright criminal.

You'll know we're in a real "credit crunch" when I'm not hearing advertisements for mortgages anymore.

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#4) On August 07, 2008 at 12:39 PM, dwot (65.40) wrote:

Canada has become a target for credit crap.  Since I've been back in Vancouver about 3 times per week I get a call from a US company trying to sell me a credit card.  Amazing really....

I was only learning what the banks had done right at the top of the ponzi scheme.  I'd heard things, but I had never looked at it in depth until then, and I am so grateful for my timing on looking into it.

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#5) On August 08, 2008 at 12:08 AM, dwot (65.40) wrote:

This one mentions timeline for events through the depression.  It starts with the stockmarket crash.  Previously I've read that the housing bubble first started to collapse in Florida in 1926, so the real stock collapse started roughly 3 years after the housing bubble started to collapse.  The bottom wasn't in until around 3 years later, 1932 I believe.  So that was a 6 year unwind process.  I think anyone calling a bottom here is about 3 years early.

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#6) On August 08, 2008 at 8:17 AM, dexion10 (27.79) wrote:

DWOT -  I saw your post on the Goldminingexpert's blog regarding the refiner WNR.

I couldn't agree more with you. If you want to get the word out that that refiner trade is dangerous  - please recommend my blog on the refiners.

I laid out the short case for 90% of the refiners. I think we'll see a capacity shake out as weak refiners like WNR and TSO go belly up.  The fundamentals of that industry have become very weak and it's not just a function of oil prices... its a function of increased refining capacity and rising interest rates.

 

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#7) On August 11, 2008 at 11:34 AM, TMFCrow (97.56) wrote:

Thank you for the great links dwot.  I'm sure this post will keep at least a few people from jumping in to the financials early.  On a side note Americans & Canadians aren't the only consumers de-leveraging: http://www.iht.com/articles/2008/08/10/business/10card.php

 

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