The roaring demand from the emerging world is more than enough to offset the losses in the home markets?
So, the decoupling theory is for real?
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Originally Posted by bwhhisc
My personal take is that things are going to get worse before they get better.
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Would it get worst? Ben Bernanke can just depreciate the dollar another 3% and send another $250 billion out of the country to achieve another 3% growth for the 4th quarter. The US is expected to lose maybe $100billion in subprime losses (based on Fed estimates), but from the look of it, it will throw away maybe $1 trillion to reduce the $100billion loss by 10%.
Can the US government do better? Or is subprime only an excuse for these people to rig the markets and make even more money? The smart money will be out of the US by now, a dollar devaluation thereafter will allow them to buy back assets at dirt cheap prices....
http://news.yahoo.com/s/ap/20071031/..._rates_housing
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"The problems in the housing market, the problems in the credit markets are not easily solved by the Fed cutting rates," said Steve East, chief economist for investment bank Friedman Billings, Ramsey & Co. in Arlington, Va., who sees the Fed making three quarter-point cuts by January and puts the odds of a recession in 2008 at 60 percent.
The thinking is that lenders can improve battered balance sheets if they have to pay less for money they borrow short-term while the rate they charge borrowers for long-term loans holds steady or moves higher. Yet analysts say problems in the credit markets extend beyond the benefits of small rate cuts.
Struggling homebuilders, such as D.R. Horton Inc., Lennar Corp. and Pulte Homes Inc., are faced with tightened lending standards and severely limited demand. Many would-be buyers are unable to qualify for loan approvals, even if rates move lower.
Lower interest rates are "certainly not the panacea" for getting the housing market back on track, said UBS homebuilding analyst David Goldberg.
The median U.S. home price nationwide fell for the eighth consecutive month in August, according to the S&P/Case-Shiller index released Tuesday. Fifteen of 20 metropolitan areas included in the index declined. Many experts predict housing prices will fall further before demand rebounds.
Jefferson Harralson, a banking analyst with Keefe, Bruyette & Woods Inc. who follows banks such as Bank of America Corp. and Wachovia Corp., said an acceleration in losses from defaults "seems to be a given, whether or not a rate cut occurs."
He says home equity lines of credit will be less likely to default if rates are lower. But that's hardly a revenue cure for banks in an environment in which housing prices continue to fall and foreclosures continue to rise.
"The home equity business isn't going to be a growth business," Harralson said.
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