+35 % on the banking sector in 4 days ! Mr. Mortgage, it’s time to mortgage your house to buy some Fannie Mae and Freddie Mac shares.

Nice little orchestrated vicious short squeeze. That the banks will be able to dump all their crap to unsuspecting investors. +35% in 4 days. At +50% they are all damn good shorts. But beware, maybe the SEC, will outlaw shorting short and simple.

The top brass in our govt/in the media still refer to this as the subprime mess – but pay option arms which will be the new wave of failures, were done for Alt A and A clientele. If ever there was a “sell the payment”
product this was it/way too many people jumped on the wrong product.

We have a long way to go….years before this comes to a stop. Meanwhile, the Fed tighened rules on lending and here are the real effects:

low to no pre-pays penalties = higher rates to the consumer

must verify income = legitimate self empld stated borrowers (a huge part of our economy) who have cash flow, yet legally take advantage of IRS write-offs will have to rely on high interest private sources who charge pts/rates cloes to that of a loan shark = higher rates to the consumer

prohibit lenders from making a loan without considering a borrower’s ability to repay a home loan from sources other than the home’s value. The borrower need not have to prove that the lender engaged in a “pattern or practice” for this to be deemed a violation = banks will make less loans for fear of fed intervention (not altogether bad for them to have some fear) = brwrs who may have legitimately qualified in the past will now not be able to qualify/or if they do qualify, they can say they were misled = a lose/lose brwr/bank.

Corrections have to be made, but credit flow is already horrendous and alot of the current/proposed solutions sound like they’re being created by inexperienced, non-market participants——if a doctor made a medical mistake, would you ask an accountant to weigh in on the solution ?

WM off over 30% today.. Wow.