Amidst the the ever so popular credit crisis "blame game" our former Fed Chairman, Alan Greenspan shares his insights with new Chairman Ben Bernanke...
From Reuters: Crisis Was "Accident Waiting to Happen:" Greenspan
"The financial crisis that erupted on August 9 was an accident waiting to happen," Greenspan said in a speech on the sidelines of the International Monetary Fund and World Bank meetings. "Credit spreads across all global asset classes had become suppressed to clearly unsustainable levels."
"Something had to give." (Reuters)
I remember the date like it was yesterday! One week you had proud Fed Chairman Ben Bernanke proclaiming to the world that the credit crisis is confined to the Subprime market...and the following Monday you have American Home Mortgage filing for Chapter 11 bankruptcy! Whoops!!!
Like the shot heard around the world, investors fled the bond market not wanting anything to do with less than perfect credit.
(Photo by REUTERS/James Reed)
Since then...
The Lender death toll is currently at 173 per the Mortgage Implode-O-Meter.
In order to help ease the credit markets, the Fed has...
Cut the Discount Rate
Cut the Fed Funds Rate
The question raining on everyone's mind now is whether or not the Fed will once again cut the Fed Funds Rate on Halloween!
While advocates like Jim Cramer are screaming "cut rates...Cut Rates....CUT RATES!!!"
The Fed might be a bit more conservative with only a 25 basis point cut, if at all.
And others have proposed...
$80 Billion Dollar Fund to Revive Asset-Backed Commercial Market - Proposed by Citigroup, Bank of America, JPMorgan and Wachovia
Only to have Greenspan Issue A Sharp WARNING On the Superfund!
At the end of the day, one thing is for sure about the outlook ahead...
The turmoils in the credit market have created price elasticities for certain markets... Homes sit stale on the market because borrowers don't qualify and are therefore resigned to a reduction in price. The higher-end markets are a bit more inelastic to the turmoil because here you often have a down-payment buyer with excellent credit.
Either way, if you're a buyer and are wondering about the market, here are some facts:
Pin the Tail On the Bottom of the Market by Tracey Thomas
Jumbo Stated Income Loans
The HOME POSSIBLE Financing Program
Weekly Mortgage Update - October 22nd - Long-term mortgage rates held steady in light of mixed economic reports. As you can see however, short-term rates have rallied downward as the bond market has improved through increased demand. We can expect yet lower interest rates today but we'll be monitoring the market closely as earnings and credit reports will continue to influence the market.
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