S&P: Washington Mutual Rating Cut to “Sell”

Shocking, an S&P analyst today changed his rating on WM to a “sell.” Considering we are entering into an unprecedented housing downturn and already in the thick of a secondary market liquidity crisis, you would think analysts would have cut ratings on pretty much all major banks, particularly those like WM with nearly 10% [...]

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1987, 1997, 2007

It is certainly interesting that very significant corrections all occurred during late summer or early fall of 1987, 1997, and 2007 (ok, so 2001 doesn’t fit this). This chart from Dealbreaker.com is pretty incredible.

Housing is continuing to unwind as Shiller reports. Once again, the government statistics on new home sales are way off [...]

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How the Bush Administration Is Turning the US into a Subprime Borrower

August 27, 2007 (Heather Wokusch) – “Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we.” – George W Bush.
Much in the same way that US investors were “steered” into rip-off mortgage loans, the entire country has [...]

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Consumer Bankruptcy Filings in First Half of 2007 up 48% from a Year Ago

Similar to the number of business bankruptcies which are up 45% in the first half of 2007 from a year ago, consumers are increasingly tapped out.   This is from the American Bankrupcy Institute:
The total number of U.S. bankruptcies filed during the first six months of 2007 increased 48.23 percent over the same period in 2006 in all bankruptcy court [...]

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Killer: “Assurances on Buybacks May Cost a Lender”

August 23, 2007 (NY Times) – Expanding rapidly as the nation’s largest home mortgage company, Countrywide Home Loans quietly promised investors who bought its loans that it would repurchase some if homeowners got into financial difficulties.
But now that Countrywide itself is struggling, it may not be able to do so, making it even harder for [...]

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Rating Firms’ Next Subprime Role: Defendant

August 23, 2007 (TheStreet.com) – As the carcasses of subprime mortgage-backed securities lie rotting on Wall Street, the buzzards are circling heretofore untouchable prey: the rating agencies.
Critics say the ratings industry was too late in downgrading mortgage-backed securities, echoing cries after past crises involving Enron, WorldCom and Russian debt, among others. But the current episode [...]

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Housing Prices: Reversion to the Mean?

Good post today on SeekingAlpha called “Missing From All the Credit Crisis Coverage: A Realistic Assessment of Where Home Prices Are Headed.” Home prices are returning to reality.

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“Liquidity Crisis Easing?” You Have to be Joking.

“Fed May Avoid Emergency Interest Rate Cut on Signs Liquidity Crisis Easing,” is the latest headline on Bloomberg this morning.
It is getting very tiring to read such inept coverage of this melt-down. I would recommend that these two reporters take a drive through the San Joaquin Valley (California) or central Ohio and then tell [...]

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“Credit Rating Companies Must Shoulder Some Responsibility”

August 21, 2007 (LA Times) – Credit rating companies must “shoulder some responsibility” for sub-prime mortgage bonds that have sparked a crisis in credit markets, Sen. Richard C. Shelby, the Senate Banking Committee’s top Republican, said Monday.
Moody’s Investors Service, Standard & Poor’s and Fitch Ratings face congressional scrutiny for an “inherent conflict” in helping construct [...]

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Shanghai Bubble?

Interesting chart of the Shanghai Composite Index. The entire run-up started in January of 2006 and has been largely driven by the incredible amount of savings transfered to the stock market – look at the massive increase in trading volume. At one point earlier this summer, over 500,000 new brokerage accounts were being [...]

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