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Oh crap..




And the stock market is up today.
The end is near, the end is near! Everyone spend all your money on strippers and beer!!!
That's awesome, I might quote myself on it....
"Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
"And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion
Originally Posted by Mia M





^^^ good slogan ... and probably good investment advice in the coming months as well LOL !
as to the article, the original comes from the New York Times
The major observation made by both articles is that the mainstream financial news media has ignored the fact that many small and medium sized banks have 100% of their capital extended towards 'construction loans' ... that the delinquency rate on these 'construction loans' is rising rapidly ... and that the probability of a gov't bailout of COMMERCIAL property loans is next to zero.
(snip)"When construction loans go bad, they can go very bad, in part because it can take a long time to slow them down after markets begin to weaken. Construction projects, once begun, are useless if not finished.
So even though construction spending began to decline in mid-2006, the volume of construction loans on bank books has continued to rise, hitting a record $616 billion at the end of September, up 13 percent from a year earlier. Mr. Anderson estimated that construction loans for single-family homes fell 10 percent over the period, but that was more than made up by increases in loans for condominiums and apartments, and by a surge in commercial construction.
It is somewhat easier to slow spending on single-family homes, since a developer planning a 50-home project can leave some of the homes unbuilt if demand dries up. But a planned 20-story condominium building cannot be topped off after 10 floors are built.
“A lot of the biggest construction lending problems are in markets that are already weak,” Mr. Anderson said. “Having weak projects hitting a weak market is just adding to the price pressure in that market.”
In early 1991, in the last big real estate downturn, the percentage of construction loans that were either on nonperforming status or behind in payments hit 18.5 percent, nearly six times the current level."(snip)
(snip)"That is unlikely to happen unless a severe recession arrives, but the possibility has worried federal bank regulators. In 2006, they proposed rules to restrain such lending but backed off after banks objected. The policy that finally came out did little more than warn that “rising commercial real estate loan concentrations may expose institutions to unanticipated earnings and capital volatility in the advent of adverse changes in commercial real estate markets.”
The problem, if it comes, is not likely to affect big banks as much as smaller ones. Banks with more than $10 billion in assets have lower concentrations of construction loans now than they did at the end of 1989. But banks with less than that amount of assets are more than twice as dependent on construction loans as they were then. "(snip)
IMHO if the federal bank regulators and the FDIC see this as a problem, and they didn't see 'trick' home mortgage lending as a problem, then Houston we've got a problem !
You can thank the Federal Reserve for that ... i.e. tomorrow's anticipated cut in the Fed Funds rate, which will further devalue the US dollar and further levitate the US dollar prices of stocks !And the stock market is up today.





Well, should I online bank or not? Money market, for a lil' higher rate..
MANY MEN WANTED TO LAY ME DOWN, BUT FEW WANTED TO LIFT ME UP
-Eartha Kitt





^^^ check carefully regarding the type of money market account they are offering. Many money market funds have invested in derivatives or repackaged 'subprime' mortgage bonds in search of higher interest rates, are therefore at risk of losses, and are NOT insured by the FDIC.





Ok, THANK YOU!!!!^
MANY MEN WANTED TO LAY ME DOWN, BUT FEW WANTED TO LIFT ME UP
-Eartha Kitt
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