Market Fundamentals 2009

From another forum " I see absolutely no end in sight to further decline because none of the root problems have been addressed or resolved by any of the bailout plans or other actions (rate cuts etc). There will be high volatility, so if you call these daily fluctuations “bounces” yes there will be some. And plenty of big up/big down days, but I see nothing but continued overall decline unless something huge happens (what that is, I have no idea) to fix this mess. And theres a lot of mess needing to be fixed. Lets look at homes - NOTHING has been done yet to solve this issue. Even if the govt takes all the bad loans from the banks, theres still millions of people in foreclosure, and millions more HEADED into foreclosure. What has been done to stop that? Nothing. There is no widespread modification/renegotiation option. That means housing continues to drop. That means people are afraid to buy/ That means people cannot sell because their loans are more than what they can get. Until there is widespread steamlining of short sales and loan modifications, this housing crisis is going to continue unabated. Lets look at credit cards - we dont see this mentioned in the news, but we see threads showing that creditors are taking more adverse action, being quicker to react at the first sign of trouble, etc. The home equity ATM was turned off last year, now people are using their credit cards. And in a short time from now, CC defaults will eclipse home defaults. NOTHING has been done to address this bc the financial industry does not want to reveal theres a huge imminent problem. This will cause even greater upset in the financial markets, and this is what I believe is going to kill the major banks. With nothing in place to fix these issues, how is there any hope for coming out of a decline? There is none. I dont think there will be anger so much as following your neighbor and simply refusing to care. When people saw their homes value declining, some considered selling. But many saw their neighbors could simply stop paying their mortgage and live RENT FREE for over a year, so they COPIED that. Now we have mass foreclosures in new developments where homes were completed in 2005-2007. Yeah the scary thing will be when we start to see high unemployment…the #s now may be higher than in recent past but are still very low. Wait till people start getting laid off. Some will try to pay their bills, call their creditors for help etc. But eventually they will talk with their friends and neighbors and hear how its easier to simply STOP PAYING ENTIRELY and get away with it. People will copycat en masse."

I forget what “Fundamentals” means

What forum?

bump for the morning

Well, I sort-of agree that we have done nothing in the US to address the original catalyst. Unfortunately, his problem has grown enormously past that. God could pay off all those homes and I think this would still continue.

The mortgage problem here in the US is the least of our problems. Seriously. I believe a lot of what is happening in the equity markets is forced selling, but I also thing the market is discounting a total implosion and cascading of counterparty failures stemming from the monster CDS market. Lehman’s auction today is just a preview.

Anyone else?

This crisis has the shape, taste, and smell of a historic economic (not only financial) crisis that may take a long time to unwind. The problem is that most speculative funds and sovereign funds that could come to the rescue are already in the market. My solution would be to cancel any bailout arrangements, drop the equity margin requirement to 20% or lower, drop the fund funds rate all the way to zero, then sit and wait for two weeks.

and create another bubble :slight_smile:

“We had the worst excesses we had in credit markets in world history. We’re going to have to take some pain,” Rogers said. “Many people bought 4-5 houses with no money down and no job… you think we’ll just say well, that’s too bad, we’ll start over and nobody loses their job? Be realistic.” People should not look to the upcoming G7 meeting with the hope that the leaders of the strongest economies will find a solution. “What they (G7 leaders) need to do is go down the bar and leave the rest of us alone,” Rogers said.