so, do you realy think the sub prime debacle has played itself out?

Answer 1

probably not. I can't believe how many people got themselves into trouble by not doing enough research on the type of loan they were getting. Interest Only loans, etc. are designed for people with money, not for people with out. one thing that should be abolished and that's using Stated Income to qualify, but that's up to the regulators.

Answer 2

I think it is just beginning. Before it is over, I think it will include more than just sub-prime. Folks that paid 3/4 million for a 400k home in California or where ever are going to begin walking away from their mortgages when they realize they paid too much.

The government might however pull a trick or two out of their sleave to prevent a wholesale collapse in home values. The trick is called ramped up inflation. They began today by dropping interest rates by 1/2%. That will get it started. By making the dollar worth less, then the overpriced houses will not seem so overpriced any longer and everybody will again be happy. Of course your Starbucks coffee will then be selling for $10 a cup or maybe $20, but what the heck all that government debt the U S sold to China will be worth only 1/4 as much. So everybody wins. At least that is the Fed's idea.

Answer 3

Muncie and the other posters are right. We are still in the beginning stages of the housing market meltdown. It's going to get worse. And Muncie is right, the fed dropping rates by 50 basis points just put into motion what could become (and I believe will be) a full blown dollar crisis. The dollar (before the rate cut) was already at critical lows. The only thing propping it up were interest rates. Now that the fed cut rates, it telegraphed to the world that it will sacrifice the dollar for the housing market. What do you think that all those foreigners holding trillions in US Dollars and dollar denominated assets are going to do as the dollar loses value and they start losing billions on their dollar denominated assets?

I believe the fed just put the nail in the coffin of the US economy. The 336 point rally today is soon going to become a old memory. Look for the markets to turn over shortly and fall HARD. This euphoria in the stock market is going to be replaced with weeping, mourning and gnashing of teeth come mid-October. We are witnessing the beginning of an economic meltdown. Thanks Ben. And think, you didn't even use vaseline.

Answer 4

I'm watching the prices go down on some really nice houses built on spec by small builders in my area (3 on one block, the rest of the lots on that block are for sale, no occupied homes on it). At some point these guys are going to have to take whatever they can get, or their banks will take the homes. That can only drive down the rest of the houses in the neighborhood. I'm sure that 2 or 3 of the occupied ones one the market in that neighborhood are people who wanted to flip them for a big profit and are now stuck with $700k mortgages on $500K homes. These aren't sub-prime people, but I suspect they will be in the future, I think the worst is yet to come.

Answer 5

nope not buy a long shot! all the fed did was prolong the agony! i think the best move was to raise rates to speed it along.

Answer 6

No.