In the Late 1980's Deposits held by S and L's were lent for mortgages and depositors money was Federally insured. When the S and L's failed the gov bailed em out!
Present Day:
these mortgages that Bear Stearns buys acted as banker are NOT federally insured. They are packaged and sold to yield whores. Low rates over the past 10 years have caused these yield whores to chase the highest yield available with no FED insurance...they will lose and thats the way it goes... If the fed cuts are says the discount window is open which it always is..its irrelavent to these people holding mortgage back securities!
They are going to foreclose because these home owners can not get qualified because the loans that they need don't exist any more...they got rid of the 100% financing deals and houses have not appreciated for there to be any equity since 2005!!!
I just drove down a street in Las Vegas and out of 20 houses I would say would say 30% are for sale. And our economy is BOOMING or on the surface appears to be.... why are these houses not selling...to expensive except for californian's and because the loans are not available that were only six months ago...
Housing has been following a 16 year cycle since the 1940's and tends to stay down for two years into the cycle low.
The implication is next year and 2009 should offer a generally improved housing market though not great.
The real problem for real estate and the markets lies with the 40 year business cycle bottoming 2014. That should kill off the real estate market recovery beginning next year.by 2010.
KC
