Mortgage market needs $1 trillion, FBR estimates

Mar.07, 2008 in Market Outlook

According to one of the congressmen, one of Countrywide’s pools of mortgages from 2006 had a default rate of 18% on the very first payment!!! Meaning that of that investment grade rated pool of assets sold to insurance companies, 1 in 5 borrowers failed to even make the very first payment!!!

How in the world wasn’t this front page news?

If nothing else, it makes it extremely easy to understand why the market for these pools dried up before the media caught on. It also makes it easy to believe that the banks are in FAR WORSE SHAPE than the market understands.

I’ve been thinking that Bernake was seriously panicked, but now I don’t think there’s a word strong enough to describe what Bernake’s feeling. He’s only got one choice now - destroy the dollar and cross his fingers. It’s either that or watch the economy collapse.

Is this the worse anyone has ever seen or will it get even tougher? I am Old enough to see that it was bad in the mid 70’s as a very young man as it kept getting worse for a number of years.
Problems today though, are much more complex and intractable as America no longer has the global economic preeminence it once enjoyed.
Therefore it will continue to get worse and last longer than most expect.
Was able to learn from my previous severe downturn experience in the 70s, unable to find decent work for years after college, living mostly on the edge, (week to week), and postponing any lifestyle ambitions.
Learned a lot from those days and never forgot them,which allows me and family to live in prudent “bulletproof” fashion. Absolutely no debt of any kind, total liquid positions, modest 2 job income small Mortgage that i could payoff and a secure pensions.
The silver lining perhaps in all this financial crunch, is to learn and use the experience to shape a sound economic road map for yourself….truly interesting times we live in…In reality though I am sorry for living prudent, and I kick myself in the a** for missing the free money train years that just passed me by…cause if I would have known then what i know now…I would be front page News…non the less..I fear for my children’s future…whatever that maybe…drinks on me.