Comments on: The Worst Is Over?

By: Norka West

Norka West — Tue, 16 Oct 2007 02:28:48 +0000

The MLEC scheme reminds me of a pony raffle at a county fair.

The raffle promoters scour the county selling raffle tickets to win a pony. On the last day of the fair, the promoters hook up a cart to a tractor, drive from stall to stall, muck out the contents from the floor of each stall onto the cart, pull the cart to the middle of the fair grounds and dump the contents.

As the children who were dreaming of ponies look on with tears in their eyes and fingers holding their noses, the promoters tell the horrified, raffle ticket holding parents “Everyone is a winner! We know that there are ponies in there somewhere. Start digging.”

By: thefinancedude

thefinancedude — Mon, 15 Oct 2007 18:37:47 +0000

Comment #5…have you seen the Credit Suisse ARM chart? Option Arms actually were picked up MORE by PRIME borrowers than subprime. Check that chart and it’s there. I think the smart money bet that rates would be lower in 09 than when you took their loans out. Based on Bernanke they’re all going to be wrong once the gravy train called Foreign Net Inflows stays negative.

By: OOUA

OOUA — Mon, 15 Oct 2007 18:30:45 +0000

enjoyed the read, good points

By: Dan

Dan — Mon, 15 Oct 2007 15:41:23 +0000

My educated guess is that any remaining uncertainty about who will be left holding the bag for mortgages that don’t perform relates to Option ARMs. All the news has been about “subprime” loans, but the bomb that has not yet blown up is the Option ARM bomb. Half of all loans that Countrywide services in CA are Option ARMs. These became popular only after July 2003 (when 30 year fixed rates went from the high 4’s to the mid 6’s). Since they have a five year “fuse” before blowing up in the borrowers’ faces (when the radically increased payments hit), these Option ARMs have not even started to go bad yet. If you thought the “subprime” crisis was bad, wait until you see the “Option ARM crisis” of 2009…

By: catherine

catherine — Mon, 15 Oct 2007 14:51:12 +0000

wow, great article, I know one thing any mortgage backed securities (about 32% of all markets) are worthless and this ponzi scheme is over, 5 houses for every person and the builders are still building…..this mortgage train is huge and will drown all other investments……this time stock and housing fail together and WE AREN’T PREPARED AT ALL………..the fun starts next month for the stock market and march for housing – get some popcorn

By: Lee Adler

Lee Adler — Mon, 15 Oct 2007 12:44:05 +0000

There are a whole lot more questions than answers about this. The market should render a verdict of sorts over the next couple of weeks.

By: Winston Munn

Winston Munn — Mon, 15 Oct 2007 00:07:06 +0000

I am concerned about the regulations that will govern this semi-secret super co-op SIV – will regulation 23A apply to this cooperative fund – will it require 10% reserve backing? Where are the reserves to back this SIV?

And finally, will this SIV simply serve as a buyer of last resort for a handful of banks that allows them to dump thier own SIV losers onto the fund and thus allow them to close out with successful mark-to-market of unredeemable trash paper? In other words, is it better for them to have one super SIV to fail than 30 other SIVs mark-to-real-market and fail all at once?

By: Radhe

Radhe — Sun, 14 Oct 2007 23:38:11 +0000

Lee,

Thanks for this writing this. I am a stranger about ABCP and other financial products. This has been very informative.

Best to you
—Radhe