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Friday, May 30, 2008
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15 comments:
http://tinyurl.com/5pchzn
"US and European debt markets flash new warning signals
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 12:38am BST 30/05/2008
The debt markets in the US and Europe have begun to flash warning signals yet again, raising fears that the global credit crisis could be entering another turbulent phase.
The cost of insuring against default on the bonds of Lehman Brothers, Merrill Lynch and other big banks and brokerages has surged over the last two weeks, threatening to reach the stress levels seen before the Bear Stearns debacle. Spreads on inter-bank Libor and Euribor rates in Europe are back near record levels.
...
But there are now concerns that the Fed itself may be exhausting its $800bn (£399bn) stock of assets. It has swapped almost $300bn of 10-year Treasuries for questionable mortgage debt, and provided Term Auction Credit of $130bn.
"The steep rise in swap spreads this week is ominous," said John Hussman, head of the Hussman Funds. "The deterioration is in stark contrast to what investors have come to hope since March."
...
Willem Sels, a credit analyst at Dresdner Kleinwort, said the banks are beginning to face waves of defaults on credit cards, car loans, and now corporate loans. "We believe we're entering Phase II. The liquidity crisis has eased a little, but the real credit losses are accelerating. The worst is yet to come," he said."
http://tinyurl.com/6kwtkp
Leroy,
Another summer bummer?
P.S. I mentioned it before, but west of Gainesville the rental inventory seems to be piling up, and I've seen multiple asking rent reductions there. Does anybody else keep an eye on the rental market in your areas?
I wonder how many investors (especially at the low end) calculated cash flow based on the premise that rents don't deflate. I don't have any statistical evidence yet and I may be wrong, of course, but it seems like if you get a lot of speculation going on at the low end for rental purchases, you might get a pile-up of inventory at the other end when these are re-released to the market as rentals.
harriet: you're assuming that 'investors' calculated cash-flow to begin with.
Harriet-
I watch Haymarket-
Yes, the rents they are a droppn'
Piedmont is getting crushed as is Lake Manassas (that's technically Gainsveille)
I try to watch local rentals in PWC (Dale City and Woodbridge). It's hard though. I've either got the best deal in the neighborhood or asking prices are totally out of whack.
Narl - Thanks for continuing to show everyone here how "horrible" the housing market is here in Arlington!
North Arlington results are mixed right now:
http://tinyurl.com/6rfnsy
http://tinyurl.com/6h9g5f
True, and Im not denying a 5-10% overall decline from peak.
I just posted some more in the latest thread up top, big gainers since boom years.
What I am saying is that the "horrible situation" Leroy and others are making out about the close in housing market is pure rubbish.
And that there is no substitution effect going on at the present, which even your posts validate. The farther out regions are showing a much steeper decline and virtually no increase in prices.
doug: I don't think anyone said that the substitution effect would be instantaneous. By definition, there is a lag.
Yeah a lag huh.
Just keep trying to retrofit some theory to the data as it comes out.
Keep changing that theory around and eventually you will be right - guess thats your plan, LOL!
Are you just being a dick, or is it not self-evident that substitution will have a lag? By definition, prices need to drop first somewhere, before substitution can start to occur.
For an example of this domino-effect in action, see these graphs, particularly graph #3.
http://novawatch.blogspot.com/
doug,
It almost seems as though you don't read Harriet's monthly posts. If you follow her data from 2006 to present, you'll see the month's supply first started to increase in PWC, while Fairfax, Alex. and Arl. were "safe." Then prices dropped in PWC while inventory crept up in Fairfax. Now prices are dropping in Fairfax while months supply increases and transaction volume decreases in Alex. and Arl. Fairfax is an imperfect substitution, but it's a substitution for marginal buyers. Everything is in place for prices to begin dropping in Arl. and Alex.
I swear this is like a deja vu moment from 2005, except we're now discussing "select" area codes rather than the entire market. Keep crowing. River, Egypt, etc.
That is completely off base; supply increased right away in Arlington, etc.
http://novabubblefallout.blogspot.com/2007/09/decade-of-august-sales.html
and is right now barely above what it was in 2006.
"What I am saying is that the "horrible situation" Leroy and others are making out about the close in housing market is pure rubbish."
I notice you put quotes around "horrible situation" I hope you aren't attributing that particular quote to me as I don't remember saying any such thing about Arlington.
I have been consistent in my statements about Arlington's market. They are obviously the last in the metro area to feel the effects of the bust, and they aren't done yet.
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