I dunno, but that doesn’t seem like BAD news to me, it seems like a logical outcome. If the real estate market is sluggish, who needs a NEW home when there are plenty of nice, broken-in ones to choose from?

Why would this make sheep tumble over a cliff?

Everything’s cyclical.

The question you ask about why if only a certain percentage of mortgages are delinquent or defaulting is the system in such dire straits is a good one. You effectively answer it in th enext paragraph. Leverage. The system was not only levered in the amount of capital supporting the actual mortgages, but then given the utilization of “synthetic” structures via CDS (credit default swaps) the risk became exponential. As I highlighted in another thread, the securities that the investment banks and a few commercial banks were holding were initially “rated” as AAA++ (the super-senior classes) and were viewed as virtually riskless. The risk managers totally missed the fact that if the underlying collateral is BB, it does not matter how much overcollateralization there is in the structure.These bonds were priced and held at par and are now “valued” somewhere in the vicinity of .10 to .20. OUCH!!!

The fact is there have been app 500bln in losses taken to date and there is potentially another $1 trillion in losses still in the system.

This injection of capital buys time for the banks to generate revenues over the next few years and write down the losses.

While you are correct that the underlying problem is the home value and foreclosures, the immediate cash need to support the banks was vital in order for a string of them not to fail.

The NEXT move should be to address home foreclosures.

Hope this helps.

http://www.nextgenerationcorp.com/NextGenBlog/?p=68

Poll finds American reject redistribution of wealth as suggested by Barack Hussein Obama.

PRINCETON, NJ — When given a choice about how government should address the numerous economic difficulties facing today’s consumer, Americans overwhelmingly — by 84% to 13% — prefer that the government focus on improving overall economic conditions and the jobs situation in the United States as opposed to taking steps to distribute wealth more evenly among Americans.

Read: http://www.gallup.com/poll/108445/Americans-Oppose-Income-Redistribution-Fix-Economy.aspx

Americans Oppose Income Redistribution to Fix Economy

[Note: Elect John McCain for a free America and economic growth.]

I thought it was THE only move that remotetly helped real people. I hate the notion of buying up the stock.

“WHAT FINANCIAL CRISIS?”

I firmly believe that until Paulson et al announced that there was an “imminent financial crisis”, and trotted out his now famous three page manifesto there was only a problem with some bad subprime loans which increased the housing foreclosure rate to a number that caused alarm in sectors of the house industry, so read my lips

THERE WAS NO FINANCIAL CRISIS

There is now a “financial crisis” which has caused huge problems with not only our country but the whole world for sure because the Bush Cheney Cabal needed another 9/11 event to keep peoples minds off the REAL problems facing this country like runaway spending, two bleeding wars, jobs being sent overseas etc. so they would vote for John McCain and they could continue in power. Notice in my list I did not include the “economy”.

Why?Because while the economy was/still is heading for an recession (the only ppl who don’t believe that have there heads stuck in the sand) we have had recessions before (a natural occurring event in a democracy) and if cooler heads had prevailed the current administration could have done some things to keep the impending recession from getting any worse until at least a new administration was in power Dem or Repug.

But they need an October surprise so they executed their plan. The only problem now is that it not only backfired and McCain isn’t getting a bump in the polls, but it has mushroomed into a worldwide problem which is almost totally out of control.

I could go on but by now you either agree with me or you don’t so I don’t want to waste anymore time trying to convince you of my point.

I will now lift some quotes from an article by a very learned man Dr Paul Craig Roberts who I hope you will believe if you don’t believe me.

Its titled

ADDITIONAL THOUGHTS ON THE BAILOUT

And can be found here……

http://www.informationclearinghouse.info/article21034.htm

Here is his take on the real reason behind what was done..

“Just as the Bush regime’s wars have been used to pour billions of dollars into the pockets of its military-security donor base, the Paulson bailout looks like a Bush regime scheme to incur $700 billion in new public debt in order to transfer the money into the coffers of its financial donor base.”

Here are a few other quotes and then I will let you read the rest and come to your own conclusions..

”The explanations that have been given for the crisis and its bailout are opaque. The US Treasury estimates that as few as 7% of the mortgages are bad. Why then do the US, UK, Germany, and France need to pour more than $2.1 trillion of public money into private financial institutions?”

“If, as the government tells us, the crisis stems from subprime mortgage defaults reducing the interest payments to the holders of mortgage backed securities, thus driving down their values and threatening the solvency of the institutions that hold them, why isn’t the bailout money used to address the problem at its source? If the bailout money was used to refinance troubled mortgages and to pay off foreclosed mortgages, the mortgage backed securities would be made whole, and it would be unnecessary to pour huge sums of public money into banks.”

“The bailout package is a result of panic and threats, not of analysis and understanding. Neither Congress nor the public knows the full story. If the problem is the mortgages, why does the bailout leave the mortgages unaddressed and focus instead on pouring vast amount of public money into private financial institutions?”

“The bailout package is a result of panic and threats, not of analysis and understanding. Neither Congress nor the public knows the full story. If the problem is the mortgages, why does the bailout leave the mortgages unaddressed and focus instead on pouring vast amount of public money into private financial institutions?”

“The purpose of regulation is to restrain greed and to prevent leveraged speculation from threatening the wider society. Congress needs to restore financial regulation, not reward those who caused the crisis.”

It’s a strange new world out there and we are going to need all the help we can get on understanding this economy and the myriad ways it will effect us.

I now am hearing stories of people not being able to renew their leases on cars due to credit problems.

It’s much worse than a recession, it seems to me.

the real culprit here is the binge of spending by bush and congress. bush’s diaster of an iraq war and those dang tax cuts at the same time. sure look at what freddie and fannie did, but don’t look just at that. the reason why loans defaulted was due to the fact that the economy began going south. jobs have been leaving this country. look AT DEMOCRATS AND REPUBLICANS. personally i have come to despise most elected officials. they betrayed all of us for a few dollars in ther pockets not unlike the 30 pieces of silve from the bible.

and the democrats have done it it again in a manner that says to me they don’t care about us at all. in fact i think they have distain for us like the media attacking joe the plumber.

i think mccain could be a one term president who spent his time righting the wrongs that have been done on both sides. he could talk directly to the american people about what he wants done and then let us kick congress’s tush. that appeals to me. let mccain have fireside chats. from now on i will no longer use the term democratic. the failure to use that term used to irk me no end. i thought it was rude. now? i join in using that term and will do so till i see real democrats again.

http://www.theatlantic.com/doc/by/stuart_taylor