OH NOES!1! TEH CREDIT!!!@!
Lots of panic and doomsday scenarios being thrown around on various financial blogs today as the sub-prime loan market continues to meltdown.
Some fun quotes:
“Financial panics don’t happen during depressions,” said James Grant, the editor of Grant’s Interest Rate Observer. “They happen on the brink of depressions. The claim the world is prosperous is beside the point.”
~ Floyd Norris column in the NYTimes
I have often been too bearish about the U.S. equity markets in the last 12 years (although bullish on emerging equity markets), but I think it is fair to say that my language has almost never been this dire. The feeling I have today is that of watching a very slow motion train wreck.
~ Jeremy Grantham from GMO Investment Management
Clearly these people know something I don’t. The situation I see is summed up well by Marc Andreessen:
People with bad credit records aren’t paying their mortgages — who would have guessed?
~ Marc Andreessen on his blog
I was reading an article on how some types of loans are “radioactive” - OH NOES! Specifically, Alt-A loans are not viable “products” (I love that term for immaterial objects). So what’s an Alt-A loan?
The Alt-A product is primarily credit-score driven, as its borrowers don’t have proof of income from traditional employment. The Alt-A loan alleviates the challenges associated with due diligence, such as providing income verification and documentation of assets.
Hahaha, who the fuck writes loans like this? (Let’s ignore the fact that I’m the holder of a sub-prime loan) Oh that’s right, high return seeking hedge funds in market awash with credit.
So let me get this straight, the entities taking the brunt of this market correction are primarily hedge funds and their LBO shops? So the impenetrable organizations who’ve been printing money for the last half decade are taking a bath? Who (besides the filthy rich) gives a fuck - at least enough to issue a rate cut?
Never has the Chinese Wall between the financial classes and the rest of us been more clear.
