Ok, in my humble opinion, 那些个作抵押的房子还在吧？？They still have their market values, even though the values need be written down, but not written off, right? But 有些现金流是 stopped for the time being until those foreclosures find the new owners with the more secured mortgage payments which bring in the new cashflow for the lenders. How much to be written down? maybe 30% to 40% depending on how desperate the lenders try to get rid of (could be lot less though in reality) As you have said above, the babyboomers are relatively well off and most of them don't have any mortgage payments. They paid off their housing loans long time ago and some of them have traded down their primary residences for smaller houses or condos/apts and pocketed the cash/capital gains (some of them free of tax charge). The subprime mortgage problems are from the borrowers who are not qualified financially at all for any mortgage loans in the first place. Right now the major problem is that the short term money market funds and the commercial papers are dramatically reduced and drained in the marketplace, so called credit crunch. Without such, the whole financial system will be in big trouble. That was why the Fed stepped in after ECB and others pumped billions capital infusion into the markets. It shows the world financial authorities will do anything they can to stop any fiascos that might happen. I bet you if something worse happens between today and Sept. 18 next Fed meeting, the Fed will cut the rate immediately without reservation. On the other hand, the economy in general is relatively healthy. I personally don't see anything bad other than the sub... causing crunch. If you have some cash to burn right now, sit on sideline for the time being and buy some shor-term cds for 4.5 to 5% interest incomes. No sense to play hero.
I went to a few cities to see if there were any good foreclosure deals. The discount was only 15% or so. No fire sale or basement sales yet. Be patient. If you see any good deals in Chicago area, please pm me. Thanks much in advance.
By the way, Bain, Carlyle and C. just cut the deal with Home Depot for its supply unit from $10.3 billion signed deal to $8.5 billion, a 17% plus haircut.
But 有些现金流是 stopped for the time being until those foreclosures find the new owners with the more secured mortgage payments which bring in the new cashflow for the lenders. How much to be written down? maybe 30% to 40% depending on how desperate the lenders try to get rid of (could be lot less though in reality) As you have said above, the babyboomers are relatively well off and most of them don't have any mortgage payments. They paid off their housing loans long time ago and some of them have traded down their primary residences for smaller houses or condos/apts and pocketed the cash/capital gains (some of them free of tax charge). The subprime mortgage problems are from the borrowers who are not qualified financially at all for any mortgage loans in the first place. Right now the major problem is that the short term money market funds and the commercial papers are dramatically reduced and drained in the marketplace, so called credit crunch. Without such, the whole financial system will be in big trouble. That was why the Fed stepped in after ECB and others pumped billions capital infusion into the markets. It shows the world financial authorities will do anything they can to stop any fiascos that might happen. I bet you if something worse happens between today and Sept. 18 next Fed meeting, the Fed will cut the rate immediately without reservation. On the other hand, the economy in general is relatively healthy. I personally don't see anything bad other than the sub... causing crunch. If you have some cash to burn right now, sit on sideline for the time being and buy some shor-term cds for 4.5 to 5% interest incomes. No sense to play hero.
