11 novembre 2007
The real carnage may be still to come
source: Moneyweek
Once a major asset bubble pops — and the housing bubble was one of the
largest asset bubbles of all time — the companies at the center of the
mess usually try to take their lumps in a single quarter, often
referred to as a “kitchen sink” quarter. By cramming losses and
write-offs into a single quarter, they try to give Wall Street the
impression that the bad news is out of the way and nothing but blue
skies are ahead.
Indeed, if the dollar continues sinking — and commodities continue
soaring — rate cuts may be on hold permanently…and that’s when the real
carnage in the finance sector might begin.
Tipped Toward Recession
source: Businessweek
The Fed seems to think inflation-recession forces
are in balance, but softening labor markets, tighter lending standards,
and nearly $100-a-barrel oil say otherwise
Sharply tighter
standards for prime mortgages and loans to households (excluding credit
cards) will put an added drag on the housing market and consumer
spending. And more stringent rules for commercial real estate loans
will dampen business outlays for new construction, which has been a key
driver of capital spending this year.
A mix of slower growth and labor-market slack would make it difficult, if not impossible, for inflation to become a problem.
West's credit crunch born when Berlin Wall fell
source: The Telegraph
The problem is that because so many of the world's exchange rates are still more or less pegged to the dollar, those that aren't will rise even more when the greenback falls. And last week fall it did, amid suspicions that the Chinese are planning to swap more of their dollars for euros in a bid to improve the profitability of their foreign reserves.
One welcome consequence of this disaster is that we might start thinking in at least slightly more realistic terms about the financial system’s true worth.
Recession talk could remain just that–talk
source: Sunday Times
The path to recession thus became clearly marked. The banks will sooner or later have to write down the value of these assets, perhaps to the tune of $600 billion (£287 billion) to $800 billion, impairing their ability to lend to even credit-worthy firms and consumers, and further tightening credit availability not only in home-mortgage markets, but in the consumer, industrial and commercial property sectors. With credit crunched, fewer factories and office buildings will get built, fewer jobs created, fewer tills filled with credit-card receipts. This will add to the downward pull already exerted by the slumping housing market, where rising inventories of unsold and repossessed properties, and falling house prices will further weaken consumer confidence, already at a two-year low.
« Les deux voitures nous coûtent 650 € par mois... »
source: SudOuest
Essence en hausse, pouvoir d'achat en baisse... Céline et Sébastien, 25 et 26 ans, ont fait leurs calculs : un quart de leurs revenus passe dans les voitures pour aller au travail.
Puis ils ont décidé d'acheter et ils sont allés... un peu plus loin encore, ici, à Mondevert. Ils ont un terrain de 1 500 m2 et se sont bien débrouillés avec la banque : deux prêts à taux fixes de 3,25 et 3,65 % sur 20 ans, mais les 750 € de remboursement par mois pèsent de plus en plus lourd.
Beware the bursting housing bubble
source: news.com.au
Every day investors were caught up in the mania. Many salarymen,
fearing they'd be priced out of the market as it continued higher,
bought properties they knew they couldn't afford, in the hope that
price increases would wipe away their folly.
The resulting bust saw housing prices fall for 14 years in a row, and
prices retreated as far as 60 per cent in Japan's capital cities.
Days of getting easy cash are over
source: Detroit Free Press
Hard times and horror stories: ...I've heard a fair share of horror stories during the past few months. A woman tapped into the equity of her house to unload credit card debt -- now she's looking at foreclosure. One couple saw a retirement strategy backfire. They downsized to a condo but still can't sell their house. So they plan to work more, not less.
The worst is yet to come:.... Zandi projects that metro Detroit's housing market could experience an average loss in home values of 25% from the high point to the low point. Values have already fallen about 14%.
Moody's says some SIV NAVs have fallen below 50%
source: creditflux
However, the rating agency pointed out that there was significant variation between the NAVs of different SIVs, with some declining only to 90% and others falling below 50%. It also said that very few of the assets owned by SIVs had been downgraded so far.
Banks Said to Agree on Credit Backup Fund
source: The New-York Tmes
The country’s three biggest banks have reached agreement on the
structure of a backup fund of at least $75 billion to help stabilize
credit markets,....
The new fund’s potential impact is unclear. Debt market conditions are
rapidly deteriorating, leading some analysts to declare them worse than
nearly a decade ago, when the Long-Term Capital Management hedge fund
collapsed.