| Posted: 21 September 2008 at 1:23pm | IP Logged | 5
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Have gun will travel (the Boone avatar)
An analysis done for the Wall Street Journal shows that mortgage loan delinquencies are still on the
rise. According to the analysis, 6.6% of all mortgage loans
originated between January 2004 and August 2008 were at least 30
days past due as of the end of August 2008, up from 5.8% in June
and 4.51% a year earlier. All loan categories, from subprimes, to
option ARMs to Alt-A's were affected. Subprimes saw the largest
increase of 2.2 percentage points from June and July to 24.48% in
August. Option ARMs jumped 1.17 percentage points to 14.38% in
August and Alt A's also rose 1.17 points to hit 10.73%. Mark Zandi,
chief economist of Moody's Economy.com, told the Journal that "The
disturbing thing is that mortgage quality is bad and getting worse." He
said the latest data "argues that foreclosures will remain very, very high
well into 2009 and 2010." So much for Barney Frank's bailout bill.
Have gun will travel (the Boone avatar)
"Huddled in his
office Wednesday with top advisers, Treasury Secretary Henry Paulson watched
his financial-data terminal with alarm as one market after another began go
haywire. Investors were fleeing money-market mutual funds, long considered
ultra-safe. The market froze for the short-term
loans that banks rely on to fund their day-to-day business. Without such mechanisms, the economy would
grind to a halt. Companies would be
unable to fund their daily operations. Soon, consumers would panic."
No, that's not from a
grade-B novel; it's from an "insider" account in today's Wall Street
Journal purporting to describe how Paulson came to the conclusion that the only
option for preventing a meltdown of a global economy was "having the government
absorb the rotten assets" -- i.e. bailing out the speculators.
By Wednesday of last
week, trust in financial institutions had "evaporated," according to
the Journal's account. Financial markets including derivatives trading,
had frozen up. "In three days, the Fed had pumped hundreds of billions of
additional cash into the financial system," the Journal reports. "But
instead of calming markets and helping to suppress interest rates, short-term
interest rates had gone haywire. Most
strikingly to some Fed staff, its own federal-funds rate, an interbank lending rate
managed directly by the central bank, repeatedly shot up in the morning as
banks sat on cash. The financial system was behaving like a patient losing
blood pressure."
On Thursday evening,
Paulson and Bernanke met with Congressional leaders to try to bludgeon them
into passing the bailout package. Paulson
gave a "chilling" description of current conditions, describing
"frozen credit markets, busted commercial paper markets and attacks on
investment banks."
When one participant asked,
what would happen if Congress didn't pass the bailout bill, Paulson reportedly
answered simply, “If it doesn't pass, then heaven help us all.
Or as Frank Miller must have said in SIN CITY: BLAM BLAM BLAM goes the financial system!!!
Just a business cycle right Myers?
Edited by Michael Retour on 21 September 2008 at 1:25pm
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