On 8/20/07, Doug Henwood <[EMAIL PROTECTED]> wrote: > I've just posted a piece on the current troubles: > > <http://www.leftbusinessobserver.com/Turmoil.html>. > > And while you're there, check out the 2005 article on the housing > mania - widely regarded by readers as stunningly prescient: > > <http://www.leftbusinessobserver.com/Housing.html>. >
It seems like LBO almost precisely called the peak for house price appreciation rate. The scary part is that the worst abuses in sub-prime and exotic ARM mortgages were supposed to be from 2006, so if it was bad in 2005, it has surely got a lot worse since. One small quibble about the new article: it attributes the disproportionate amount of anxiety from the small proportion of delinquencies to uncertainty and risk repricing, but what about leverage? ----------------------snip Although the subprime market is only a small share of the total mortgage market, and although subprime loans in default are only a small share of the subprime universe, the rising default rate on these loans has created a seemingly disproportionate amount of anxiety. Part of the reason for this is that, thanks to securitization and the mysterious ways of CDOs no one really knows who holds what or how dangerous supposedly safe securities will turn out to be. -raghu.
