One of my heroes is is economist John Mauldin. He publishes a free e-newsletter that I consider a “must read” for anyone that closely follows investing and economics issues. In his most recent “E-Letter”, John commented on the Bear Stearns sub-prime debacle (That I’ve also discussed.) Here is a quote:”The Center for Responsible Lending estimates that 2.2 million borrowers who got subprime loans since 1998 either have lost or will lose their homes through foreclosure over the next few years. This includes one of every five borrowers who got subprime loans in 2005-06, a default rate unmatched in the history of the modern mortgage market. You can go to your Bloomberg quote machine and pull up residential subprime structured finance deals. What you find is one Residential Mortgage Backed Security that was issued in 2006 that already has over 54% of its loans more than 60 days delinquent and 17% of them in foreclosure. Think the buyers of that equity tranche stand a snowball’s chance of getting anything?
Has this security been re-rated? No, because the ratings agencies say they cannot re-rate something until they know for certain there are losses. They can’t act on suspicion. However, I do remember them putting out warning notices for various bonds and corporate offerings prior to re-rating. I would think those are coming.”
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A reminder to SurvivalBlog readers in the Northwestern U.S.: Don’t miss the first WSRA high power rifle training/match in Kooskia, Idaho, on July 7th and 8th! A few free training scholarships for this training weekend are still available. Just send an e-mail to westernshooters@gmail with the word “SurvivalBlog” in the subject line.
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Reader MWR recommended an article from Jim Willie that was posted on Jim Puplava’s web site. MWR’s comment: “I don’t always agree with his (Jim Willie’s) politics, but I think his economic analysis is spot-on.”