Recent signs of stabilization in the US housing market are “likely to be the mother of all head fakes,” say Whitney Tilson and Glenn Tongue of value hedge fund T2 Partners. They say the signs of ‘stabilization’ are due to two short-term factors:
We’re confused this morning… help us understand this mess.
I never thought an 18.6% decline could actually represent good news. But in an example of how desperate we’ve become for it – particularly concerning the U.S. housing market – many have jumped on the fact that it was the first time in 16 months that U.S. home prices didn’t drop by a new record. Wow… where’s that champagne?
On close inspection, there are only two possibilities for the Geithner “Rescue Plan”: It’s an honest effort doomed to fail… or a blatant scam that just might work.
Latest data from the housing market shows that the misery is set to continue for a while yet. But Christian Hill says investors can still make money by shorting two real estate specific ETFs (IYR, VNQ). A more speculative play is the UltraShort Real Estate ProShares (NYSE:SRS) inverse ETF.
“The boom years are over,” says Bill Bonner. Of course, this is what Bill has been saying all along in The Daily Reckoning. Now that’s the day of financial reckoning has come to pass, however, Bill is feeling a sense of dread. That’s because, as bad as things are right now, they look like they’re about to get worse…
With the housing crisis in full swing Americans are frantically searching the internet for foreclosure predictions.
Foreclosure predictions, of course, have a nasty habit of turning out wrong.
According to AP, although the foreclosure rate in the US began to accelerate in 2006, “people lost their homes at the highest rate on record in the first three months of this year, and late payments soared to a new high, too – an alarming sign that the housing crisis and its damage to the national economy may only get worse.”
A new report by Paris-based economic think tank the OECD warns of a severe house price crash in the UK.
The report predicts that UK house prices will crash by 10% by 2010 and that, with consumer spending slowing, the Bank of England will eventually need to cut interest rates by three-quarters of a percentage point to 4.25% next year.
Ben Traynor in The Daily Reckoning explains how a house price crash in the UK will affect the country’s economy…
They’ve already taken a hit on subprime, now major US banks, including troubled Wachovia, could be facing a similar crunch in the construction-lending market.
Part of Wachovia’s problem — apart from its residential-mortgage woes — is the $23.9 billion in outstanding debt it holds in relation to commercial-property projects at the end of the first quarter, according to The Wall Street Journal.
“Teaser rates of just 1% interest, left almost one-in-ten subprime borrowers unable to meet their monthly mortgage bills,” says Adrian Ash in The Daily Reckoning UK.
Since the beginning of the subprime crisis last July, financial companies around the world have fired a total of 83,000 workers, sparking fears that the global recession could be worse than expected. This from Bloomberg:
It’s as if the entire workforce at Goldman Sachs Group Inc. and Morgan Stanley vanished in less than a year.
From Tokyo to London to New York, financial companies announced plans to shed more than 83,000 jobs since last July as revenue and compensation pools evaporated, according to figures compiled by Bloomberg.