Bank Downgrades

Calculated Risk has a link on how BofA is being downgraded due to the risks inherent in the Countrywide loan portfolio. So which banks do you think will be downgraded or fail within the next 12 months? How about even within 2008?

Wachovia, Indymac, Downey and a dozen others are obvious targets.

I'd like to hear what are the weak links internationally. Heck, update me on the East coast wink links too!

Got Popcorn?
Neil

I'm boring

I'm on the same topic again, the state of the mortgage backed security market as represented by the ABX indices. Ok, I missed the stock market prediction last week. Oops.

But look at the A rated ABX index. Please note, a new Y axis versus last week. The close was 69.35 (not updated on the graph headings until the next day). My last post had this at 81.5 cents on the dollar. In round numbers, A rated CMBS bonds dropped 15% in one week. OUCH!

http://www.markit.com/information/affiliations/abx

Every tranch of CMBS is falling fast. AAA rated went from 97.31 to 95.53 today. (OUCH! Those bonds have poor yields due to their "safety.") BBB and BBB- are trading below 50 cents on the dollar. Must suck to have an investment like that hedged. Let's see... 6 times a 50% loss is... Ummm... officer, *that* Mr. Smith is over there (broker bolts for exit).

Anyone who says we haven't seen the darkest days hasn't contemplated what it will be like to get a mortgage come September 1st. Oh... the impact will be less than I imagine... The implode-o-meter will not stay stuck at 99 for very long. ;)

Got popcorn?
Neil

Aircraft, boats, and homes

I know I haven't been the best at keeping up the posts since the wedding. Mea Culpa.

Ok... no new information on Aerospace jobs in/out of California.
Other blogs are doing a better job of the inventory buildup and credit crunch. (If you haven't been following the bond market... you're not going to know what's about to happen.)

So I'm doing a little personal post on what the attitude is among the many people I run into.

Home sellers: Quite a few in my day to day selling. Most are arrogant; they *know* they'll get they're price. Funny... none of those guys talk about having sold a property... One coworker just cut his price $50k, sold, and knows he got lucky. Another sat down with me and has agreed to start cutting his price to move the place. Another is just paralyzed. He isn't ready to admit his home has lost $50k to $100k of value... so he just quotes his realtor.

Planes: I work in aerospace, so it shouldn't surprise you that I run into pilots day in and day out. They're always talking planes. "I'm now commuting in a commander as its 20 knots faster than my old cessna... yea, moved the engine over..." Normally, there are photos on the walls of the planes they're thinking of buying... Not today. Every is selling. Some really neat planes have been sold by my coworkers (including a WWII soviet YAK!). All are putting their planes on the block.

boats: The discussions on boat buying are just gone... even those that race have stopped talking about it...

I'm thinking the indefatigable American consumer is taking a breather.

When will they start up again?

No stats... but a definitive change from 6 months ago...

Got popcorn?
Neil

ABX in new territory

The ABX market has dropped into new uncharted territory.

http://www.eurobondonline.com/abx-HE-BBB-06-2.Htm

Anything below 82.5 cents is tough to trade.

This implies that the Bearn Stearns issues are NOT contained.

Expect credit to continue to tighten. Thus home sales to continue to drop.

Got popcorn?
Neil

What price freedome?

This is a totally non-housing related post.

What price do you put on freedom? I just discovered that it can be quite a bit. Why? A relative of my fiancee' had given her a gift of cash in the past and was holding it over her (and my) head(s). In an argument tonight (it is 3am, just finished), we finally asked "how much?"

I just wrote the third largest check of my life to buy out of an "obligation."

The largest was a down payment on a house (sold pre-bubble... damn! At a small loss too.) :(

The second was to buy my BMW, cash on the barrel. :) 145k miles later, I'm happy with it. (but warning, the maintenance is too much. But I will keep it another 100k engine/transmission willing. FUN car.)

The third was tonight. Ended the argument and dis-invited the person from the wedding (they were making a fuss over new guests we "had to fit in to the wedding.") Ok, funny, the spouse (+ "guest") is still invited (love the spouse... yea.. life throws curve balls...) , so the person will still be there. But under our terms. ;)

Make no doubt, there was a debt of gratitude owed. The person had been generous. Now paid in full. Every red cent. Ok, I have to scramble to the bank tomorrow to make sure no wedding checks bounce, but all is ok. Did I mention I'm a saver. ;)

Did I have to pay the person? No. Not even when my fiancee' asked me to whip out a check. (We had been paying wedding vendors all day... Due to a trip, I was behind paying my share, so it was time for me to pay for everything at most of the vendor "finals". Can we say OUCH!).

So somewhere someone is going to stimulate the economy whom has no belief in a housing bubble. Even then, I feel better. (I Can't believe it, it takes me weeks to work up to spending $500, normally.)

Bedtime is now coming (had to wind down). Its sort of fun knowing I've rewritten the rules. We left noting, its a new day.

I cannot ever tell you who I bought out.

They say a wedding is a new start. For us, in more than one way, it truly will be.

Neil

ps
Six days to go until the wedding! Expect one more post and then nothing until mid-June. (We're doing a proper honeymoon.)