"Oh yeah, it’ll come back. There’s nothing wrong with it. Just a little dip then it will roar back." -Californian on the real estate market.
From a Reuters article tonight:
"Bear Stearns Cos. Inc said in a letter to investors on Tuesday that it would provide up to $3.2 billion in financing for its High-Grade Structured Credit Strategies Fund. A copy of the letter was obtained by Reuters. Sources familiar with the funds said the net asset value for that fund is about 9 cents on the dollar. Market participants said the Bear Stearns news underlined the extent of the problems plaguing the subprime sector, which caters to people with poor credit histories and has been stung by rising defaults."
NovaStar and Bear Stearns are not isolated incidents people. The CDO market will make LTCM look like a joke. If we had rising wages and slightly lower consumption levels, I’d say that the sub-prime market had a shot. But we have neither of those, so it’s doomed. Friggin’ doomed.