U.S Stock Market Continuous To Fall, The Interests Cut Is Necessary For The Entire Economics

U.S Stock Market Continuous To Fall, The Interests Cut Is Necessary For Market And The Entire Economics

“Strong credit scores are the main factor driving mortgage lending today, but borrowers also need proof of employment and money in the bank to obtain a loan. Traditional prime mortgages are still readily available, but the supply of other mortgage types is severely constricted, Green said.

Nearly one in five subprime borrowers was at least two months’ payments behind in July, while one in 20 alt-A borrowers fell in the same category, according First American LoanPerformance. Subprime loans are made to people with poor credit history, while alt-A loans are mostly made to people with limited documentation.

With the market in a nosedive, mortgage originators are likely to continue to play it safe for the foreseeable future as they try to avoid losing more money. That means fewer people will qualify for loans.”

http://biz.yahoo.com/ap/071027/wall_main.html

Even through the mortgage lending leader Countrywide Financial Corp. (CFC) has announced projects return to profit. However, it can’t really symbolize a turning point for the whole economics start to recovering. Since the mortgage lender like CFC is going to restrict people for the loan which means fewer people will qualify for loans. Therefore consumption rate is still heading lower. The Companies those who already facing the problems in the mortgage field is likely to cut the jobs. Other companies are facing a dramastic sale drop is another issue for the them, if they file bankrupt and they would cause another problems for banks. Last week, the second largest bank, Bank of America has said to eliminating 3,000 jobs units.

Companies bankrupt and banks profits drop and restricting mortgage reinforced the consumption rate heads lower. For people who still hold the hope for the financial troubling companies to be acquired or merger, that’s a little too optimistic. Most of companies like to surive by keeping its extra money for future sale drop. Particularly in residential building and real estate field. For them, cutting jobs and increase their debt to fund their operation seems necessary.

The mortgage mess has already spread to car loans and credit cards. If consumers run scared and stop borrowing, the economy is in big trouble.

“The damage came from two directions: mortgage delinquencies and assets backed by mortgages. At Citigroup, for example, delinquencies soared in September. The percentage of first mortgages more than 90 days past due climbed that month to 2.09% from 1.29% a year earlier, and second-mortgage delinquency rates doubled from earlier in 2007. And losses from Citigroup’s investments backed by mortgages climbed to $1.56 billion for the quarter. That was well above the $1.3 billion loss the company had pre-announced just weeks earlier. “

http://articles.moneycentral.msn.com/Investing/JubaksJournal/CreditContagionInfectsYourWallet.aspx 

The Fed would have to cut the interest at least .50 for the whole economic at Wednesday. But the interest cut won’t help the economic too much, the recovery takes time. I wish Tech and health care sectors could rescue the market.

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