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Belfast Boy

Credit Crunch - Part 2?

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You would have to live on Mars not to know about the 'credit crunch.' It is intersting to chat to people about it and hear their opinions. Most people know that it all started in America with sub-prime mortgages. Most people seem to think that it will be over by Christmas :rolleyes:

We are only getting to part 2, of the credit crunch, in America...

New York Times - Housing Lenders Fear Bigger Wave of Loan Defaults - click here.

The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.
Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.

But, but, but...

I thought house prices were still rising in some parts of America like New York :blink:

We have not even had our sub-prime crisis yet! Don't worry we will catch up fast. :(

Edited by Belfast Boy

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We have not even had our sub-prime crisis yet! Don't worry we will catch up fast. :(

So far i think people are using the " Credit crunch " as code for " i'm skint " and have no real appreciation of the effects of turning off the credit taps .

edit for typo

Edited by Malthus

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Then in 2009 the problem of the ARM's resets will hit. That is a 500 Billion USD problem. Word has it that many of the home owners on these ARM's are alkready walking away, before the reset. Their monthly payments will double at reset. And the property values at todays prices are 30% less than the value of the mortgage. Why would they not walk away? They don't care about their credit rating. See chart below for ARM resets. I think we are only 25% of the way through. Bottom will come 2012,perhaps later.

US_housing_bubble.png

0604_arm_reset.jpg

0604_arm_reset.jpg

post-13039-1217858787_thumb.png

post-13039-1217858840_thumb.jpg

post-13039-1217858953_thumb.jpg

Edited by VedantaTrader

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So far i think people are using the " Credit crunch " as code for " i'm skint " and have no real appreciation of the effects of turning off the credit taps.

Amazing to think that just 1 year ago almost nobody had heard of a credit crunch. Now a local supermarket in Maghera have, "Beat the Credit Crunch!" on the front of their weekly mailshot.

It has become a bit of a catch all phrase. There are many things I did not know (or care) about this time last year - MEWing, mortgage resets, standard variable rates, buying chains, rental yeilds, house price/income ratios, market cycles for starters. Those were all the easy things to grasp. Then there were credit derivatives, CDOs, MBSs , CDS, monoline...

“Oh what a tangled web we weave, When first we practice to deceive”. Sir Walter Scott

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Amazing to think that just 1 year ago almost nobody had heard of a credit crunch. Now a local supermarket in Maghera have, "Beat the Credit Crunch!" on the front of their weekly mailshot.

It has become a bit of a catch all phrase. There are many things I did not know (or care) about this time last year - MEWing, mortgage resets, standard variable rates, buying chains, rental yeilds, house price/income ratios, market cycles for starters. Those were all the easy things to grasp. Then there were credit derivatives, CDOs, MBSs , CDS, monoline...

“Oh what a tangled web we weave, When first we practice to deceive”. Sir Walter Scott

All these new ways of banks "making" money are in my opinion pure greed , the traditional bank/building society model of taking deposits and lending out using a multiplier of roughly 4 times was a licence to print money ( literally ) .

The move to CDO's etc gave massive bonuses to city workers as well as massive returns to shareholders , however it is never " different this time " and as per Warren Buffet the tide is well and truly out .

Edited by Malthus

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Amazing to think that just 1 year ago almost nobody had heard of a credit crunch. Now a local supermarket in Maghera have, "Beat the Credit Crunch!" on the front of their weekly mailshot.

It has become a bit of a catch all phrase. There are many things I did not know (or care) about this time last year - MEWing, mortgage resets, standard variable rates, buying chains, rental yeilds, house price/income ratios, market cycles for starters. Those were all the easy things to grasp. Then there were credit derivatives, CDOs, MBSs , CDS, monoline...

“Oh what a tangled web we weave, When first we practice to deceive”. Sir Walter Scott

BB for one such as I who is not so familliar with these terms, wouls it be too much to ask for a list type format of the terms and what they mean? Think newcomers would welcome this info...

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BB for one such as I who is not so familliar with these terms, wouls it be too much to ask for a list type format of the terms and what they mean? Think newcomers would welcome this info...

The ones I mention are -

CDO = Collateralized Debt Obligation.

MBS = Mortgage Backed Securities.

CDS = Credit Default Swaps.

Monoline = monoline insurance.

... as for what they mean... all I would be doing is a copy and paste from wikipedia.

Edited by Belfast Boy

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The ones I mention are -

CDO = Collateralized Debt Obligation.

MBS = Mortgage Backed Securities.

CDS = Credit Default Swaps.

Monoline = monoline insurance.

... as for what they mean... all I would be doing is a copy and paste from wikipedia.

All versions of the conmans three card trick , now where is that queen ( bad debt ) ?

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The ones I mention are -

CDO = Collateralized Debt Obligation.

MBS = Mortgage Backed Securities.

CDS = Credit Default Swaps.

Monoline = monoline insurance.

... as for what they mean... all I would be doing is a copy and paste from wikipedia.

Thanks BB ;)

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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