Comments on: PROPERTY FALLS, MORTGAGES STAY THE SAME

By: Willy2

Willy2 — Tue, 20 Jul 2010 15:53:47 +0000

Deleveraging is not a myth.It’s happening as the graph shows but at a much slower pace than the fall of homeprices. And that’s precisely why the banks are in (extremely) deep trouble.

By: Roger Ingalls

Roger Ingalls — Tue, 20 Jul 2010 14:18:11 +0000

Here’s an even better synopsis, largely in support of this article.

http://www.ritholtz.com/blog/2010/07/the-4-trillion-dollar-question-2/

By: Michael Covel

Michael Covel — Tue, 20 Jul 2010 02:27:23 +0000

Japan-like process unfolding. That ain’t 4-5 years. If market forces ever get the lead position in front of government intervention … we all know what will happen. Seat belts tight.

By: J.Ashley

J.Ashley — Mon, 19 Jul 2010 19:17:59 +0000

I’m still of the same opinion as walden, that a massive debt writedown will have to be down, perhaps in stages, perhaps all at once, as a matter in the interest of the public and national security. This means a default on US Debt obligations, most likely. Otherwise, we simply leave this debt noose tied around the necks of Americans until some time distant into the future, maybe 10-15 years. Too many other things will have to go right, all at once, for this to end positively. For instance, sudden increase in employment, coupled with continued easy rates by the Fed, and probably a loosening of credit standards, which seems impossible from where I stand. That’s the only way to get property values stable or climbing steadily again.

All of the growth from 2002 to 2007 was done on a debt binge. Now, we must pay the piper. We pulled forward demand from 10 years out. I don’t expect a healthy US economy for at least 4-5 more years.

By: AWF

AWF — Mon, 19 Jul 2010 18:51:50 +0000

Another question might be –Whats the Banks coverage ratio for these loans ?–Or has JPMorgan says Tomato / Tomoto–its just ink on a piece of Paper

By: quark

quark — Mon, 19 Jul 2010 14:27:55 +0000

Oh my…what a revelation….gee do you think that when the quasi-government Fed decided that they were going to change the rules and allow banks to lock the value of their non performing RE loans at the height of the marker vs requiring them to mark them to market as they were allowed to do on the upside that this statistic somehow would reveal another truth.

Delusion has replaced reason as the last pillar supporting financial valuations and our economy since 1982.

By: Hangtown Bob

Hangtown Bob — Mon, 19 Jul 2010 13:40:14 +0000

The debt has remained high only because it is still being carried on the books at full value or close to it. If the debt is non-collectable, then it can be argued that it doesn’t even exist.

By: jt26

jt26 — Mon, 19 Jul 2010 12:52:28 +0000

Ditto walden’s comment. Also, if the headline was “financial assets fall; book value in investor’s portfolios stay the same” what would that mean? The other impact is on the USD via the indirect liability.

By: walden

walden — Mon, 19 Jul 2010 12:00:35 +0000

Theoretically, excess outstanding mortgage debt can be lowered overnight, since the government now owns most of it. But that takes enormous political will, since it would be debt-forgiveness for a specific subset of citizens (who are not even Wall Street banksters!). So, it has to be done gradually through short-sales and foreclosure, thus drawing out the depression (just as propping up banks has drawn it out).

By: GLH

GLH — Mon, 19 Jul 2010 08:34:11 +0000

TPC: Still believe in the “work out” scenario? Or maybe it is really what is behind door number D.