The Wall Street Journal Front Page Story

US Mortgage Crisis Rivals S&L Meltdown


Make sure you get to the very end of that scare the sh*t out of us article to read this:

In spite of the gloom, the economy may avoid recession. Housing comprises a much smaller share of the economy than business investment, which dragged the U.S. into recession in 2001. Also, the rest of the world is stronger than in 2001, boosting U.S. exports. For the entire U.S. economy to contract would probably require a broad decline in consumer spending, which hasn’t happened since 1991.

And, while financial problems are serious, they aren’t — at least yet — on a par with those of the 1980s, when many major banks would have been insolvent had they valued their Third World loans accurately. There is, indeed, a possibility that the opacity of today’s mortgage securities means markets may be factoring in far larger losses than will actually occur. Though the Fed is still worried about inflation, it has plenty of room to cushion the economy with additional interest-rate cuts.

US Mortgage Crisis Rivals S&L Meltdown [The Wall Street Journal]

7 thoughts on “The Wall Street Journal Front Page Story

  1. The fact that the general economy isn’t sucking-wind is really the only silver lining here; but it doesn’t mean that residential housing is a good investment as an asset class. It’s really amazing to see all this press on the market.

  2. when was the last time you bought a new car eddy? how about a new appliance? i think we are headed for a nasty 2008. i don’t know anyone spending money right now. i even heard christmas was cancelled.


  3. 2006 – car; 2007-multiple significant purchases.

    I believe this is a unique point in history for the real estate market. Lot’s of moving parts. Even though there is a lot of doom/gloom regarding the RE market, it doesn’t exactly translate into a negative situation. A lot of factors are overlooked. Nobody ever mentions the fact that the change in capital gains allowances on property gave existing homeowners “in the money” a one-time boost in asset value like a special dividend. I’m not a bear, but I’m certainly not a bull. Just a curious student paying attention.

  4. Curious if the democratic majority will take away the tax free 2 year flip in 2009 as a way to raise money.

  5. No, amazing is oil sold for $23/ barrel in the winter of 2002..the futures market price was about $30/barrel, today it is nearly $100/barrel. What changed? (Four letters and you only get one try)

    The WSJ just confirms what I’ve been thinking since the bailout announcement last week- Why would the most anti-interventionist administration since Herbert Hoover do ANYTHING? Because its bad, real bad.

    Last- there isn’t a national real estate market, only aggregated data of many individual markets–market’s like mine in Charlotte, also Seattle and Portland, where jobs are growing much faster than the nation, are attracting more buyers pushing prices up. A few other markets- San Francisco, and Manhattan, are seeing price increases because of the scarcity of building lots… the balance of the nation, is not doing so well, and the two markets that really ballooned, have popped.

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