Jack:

It's worse than you think. I used to, until two weeks ago, work for the tenth largest mortgage lender in the country, American Home. In a stunning implosion, they went under in a week. Yesterday, the nation's largest lender, Countrywide, got downgraded by Morgan Stanley, their corporate bonds are trading for 70 cents on the dollar, they just drew down their entire warehouse line of short-term credit, and their stock is down 30% from Tuesday's open. They are battening down the hatches (they drew all of their credit line for fear it would be cut off) and hoping to ride out the storm, but I'm not hopeful.

Once Countrywide goes down, and I think it's virtually inevitable, the mortgage market is going to go back to 1988 lending standards - 30-year fixed, full doc, 700 scores or better. It's the only thing investors are willing to buy. That means that well over half the country won't qualify for a loan.

That means that the losses in value across the country will continue and rents are going to go up. I think that if the wave washing over the country is strong enough, not even the Pacific NW will be spared from the decline. I don't think it will be too bad, but we will likely drop some.

With the credit crunch reaching Main Street, I think we're headed for a recession. With the global banks no longer believing anything Wall Street is telling them, we're going to see some laws passed very soon (more Sarb-Ox stuff) by Congress to prove to the world that our books aren't as cooked as it thinks they are. Trouble is, well, they probably are.

I'm sure that Don is right about Countrywide. This little bit of insight all but confirms that:
"Filings with the Securities and Exchange Commission show that Countrywide Chairman and CEO Angelo Mozilo has exercised options and then sold 672,000 shares of the company's stock, netting a profit of just less than $13 million in the transactions."

I have been predicting a drop in the local housing market for some time. Just a few weeks ago, the Wall Street Journal published a listing of the largest housing markets and the Portland area had one of the higest percentage increases of homes on the market. The housing industry has been proping up the Oregon economy for several years; and I for one will not be a bit surprised to see a replay of the 2001-2003 recession in Oregon all over again. Unfortuantely, Ted and the dummies in the Legislature have spent almost every dime of the 2007-2008 budget. And I seriously doubt the "rainy day fund" will be much help when the economic tide turns here.

I blame Bush for part of this financial meltdown, but not all of it. Our country has been running large budget and trade deficits for a long time, and we've had overly loose lending standards for at least a decade. There are many folks to blame for these conditions.

Ultimately, though, we only have ourselves to blame for this mess. We elected Bush twice, we deluded ourselves into thinking that all those questionable loans would be repaid, and we didn't insist on laws and a level of regulatory oversight that would reduce the risks. We're screwed.

We might have elected Bush once.

Yes, it is Bush's fault.

I am more than willing to blame Bush for everything as he’s a moral and intellectual runt. However, on this issue he may not have done anything to help the situation but I suspect any White House occupant would have behaved the same way. Cheap money and silly house prices seem to make most voters happy. Politicians cannot afford to think longer term than their constituents. They should but it costs them their jobs.

Portland didn’t go as nutty as many places but our time will come. Having said that, houses in my area (NE) seem to sell in days if the price is semi-reasonable. The good news for many readers of this blog is that the condo market will tank first. They can then blame it all on planners and get a warm fuzzy feeling.

Don,
Sorry to hear your company tanked. Good luck to you. You'll land on your feet... you're a talented guy.
Sincerely,
Dave

I thought Clinton got a balanced budget and some surplus the last couple of years, even lowering the outstanding debt, (accrued deficits). Whether his black ink was from trade surplus, or he kept having trade deficits, (as said above), I don't know.

This 'meltdown' topic is clearly seen coming, in scope and scale dwarfing the 'Great Depression.' Think, like, millions of Americans starving to death -- not that millions are going to starve, just, think like that.

This is the end of the arc which began in trajectory at the invention of the Federal Reserve, 1910, (not 1914). It settles the mind in fuller understanding, of today's chaos and future lifestyle choices, by a rewind and review of awareness in the persons (lives and beliefs) making the Fed.Reserve, and of awareness in those times -- when the fervent economic discussion was metal coinage. If asked whether we should go back (1910) and do it over and get it right, (public money supply -- see, the Fed.Reserve is private), as to your mettle for metal, how would you vote? Maybe a rewind and review is in order before you decide your vote.

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There is a seldom mentioned, yet documented, sidebar to today's 'money' talk, and circumstances -- let me remind us: About '88 or '89, Herbert elected, USSR quitting the cold war game, Iran - Iraq ending in stalemate, and amidst other strange goings-on, Saddam Hussein got one of the four pristine plates of the US Treasury for printing hundred dollar bills. Rumor said the plate was stolen out of the Treasury 'by' CIA auspicies and (who) delivered it to Saddam; for what quid pro quo, what Saddam gave the CIA, I don't know.

Some consequences followed, which are more widely known. As soon as Newt ruled the House ('94), an early business taken up was the re-design of the hundred dollar bill. It was said this would 'strand' all the 'drug kingpins' money piled up in C-notes they didn't dare legitimately bring forward to exchange for the new designed ones. (Also in the House hearings testimonies, is where the WashPost reported the disclosure of Saddam getting the plate, etc., etc.) Then, to disguise the specific vulnerability of the C-note, the House gangbanged onto the measure all the other denominations, saying, 'oh, heck, let's just redesign the fifty, twenty, ten, five, and one, too, no reason why not to.' Also, no reason to.

Check your billfold today for those consequences.

For another glimpse back into Papa Bush's (keeping in mind, he's still King of the CIA), deals with oil-rich Saddam, recall seeing during our invasion that our troops found pallets of bundled C-notes, tons of the stuff. The valuation reported in the first cache was north of one billion dollars American, and the second cache reported was a billion, too. Those were not counterfeit. A few discovering troops had stuffed several bundles in their camo's but, surely, that all got straightened out and put back. Didn't it ...?

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Anyway, bottom line, the Federal Reserve has the contract to print our money, (using Treasury printing plant facilities), yet they've stopped reporting (M3) how much they do or don't print, and rumor word idea is that they may be going out of business, closing up shop. You know, everybody can just pass chips of metal around among themselves ... or something

Oh, almost forgot to mention, right after the Fed.Reserve invented paper money, federal income taxes began.

Since they could. and so, why not?

Bush is getting blamed for stock market declines now?

Does that mean he gets credit for the near doubling of equity indices from their October 2002 lows?

If you can't stand the heat, get out of the kitchen.

My gosh, I finally agreed with Sherwood on something. "Yes, it is Bush's fault."-NOT!