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Thread: The Credit Crunch

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    Registered User stewart38's Avatar
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    The Credit Crunch

    I read today shock horror an article about Merrill Lynch and how they have been ‘effected’ by the credit crunch. Ill quote

    “The sub prime debacle saw Merrill slide into a third quarter loss of 1.1 billion its first loss since dot com crash of 2001”

    Awwwwwwwwwww Less champagne this Christmas


    2006 Merrill lynch comments
    ----------------------------
    The Christmas bonus season on Wall Street has been the most lavish ever, fuelling the New York economy and dramatically improving the city government's finances thanks to tax revenues.
    ---------------------------


    Its funny you just don’t read about those who are getting their homes/trailer reprocessed because they will sold mortgages they could never afford

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    Re: The Credit Crunch

    Quote Originally Posted by stewart38 View Post
    ...Its funny you just don’t read about those who are getting their homes/trailer reprocessed because they will sold mortgages they could never afford
    They bought mortgages they could not afford, and more than a few of them did it with fake income statements and other reckless behaviour. It is a demand driven business. If they were mis-sold they should have cause for seeking compensation.

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    Re: The Credit Crunch

    Quote Originally Posted by bigdjiver View Post
    They bought mortgages they could not afford, and more than a few of them did it with fake income statements and other reckless behaviour. It is a demand driven business. If they were mis-sold they should have cause for seeking compensation.
    Its the same as Self-cert mortgages here..... how badly do they want to be on the property ladder

    The Credit Crunch isnt per se, all to do with that, its just the catalyst. the problem has been because those "dubious" mortgage backed securities were then put into CDO's (collateralized debt obligations).

    A CDO usually has more than one class of security not only that but they varying degrees of priority when it comes to repayment, this complex structure makes it difficult to assess the real risk of CDOs ( bit like being sold a chopped motor (John).

    This has lead to the current problems because not only do the banks not know yet how much bad debt is out there they also dont know who has it

    The real balance sheet hit that Myrill Lynch has taken is actually a US$7.9-billion writeoff of US$6.9-billion due to its exposure to CDOs and US$1-billion in direct sub-prime mortgage exposure.

    Merills, Bear-Stearns and Bank of America were the first wave, this thing has got a while to run yet ......... The cost to them will be passed on to us in the form of more expensive credit, and although banks are still headlining with loan rates such as 6.9% APR, one assumes you would need to be a member of the heavenly host underwritten by the man himself.

    Me cynical.................nah

    btw if there spelling and/or grammar issues, I got better things to do!
    Last edited by mikeyr; 25th-October-2007 at 04:24 PM. Reason: Got work to do!

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    Registered User stewart38's Avatar
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    Re: The Credit Crunch

    Quote Originally Posted by mikeyr View Post

    btw if there spelling and/or grammar issues, I got better things to do!
    Well I havent

    Do I blame someone who is allowed to inflate their income by a factor of 10 or the advisor or lender (who doesn’t check) to allow that to happen


    50/50 me thinks, coverage is 90/10

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    Re: The Credit Crunch

    Quote Originally Posted by stewart38 View Post
    Do I blame someone who is allowed to inflate their income by a factor of 10 or the advisor or lender (who doesn’t check) to allow that to happen
    Given the pressure to own your own piece of real estate in the this country is it surprising and the US is no better!

    I dont want a mortgage! For those of you that know me know why, for the rest, read this.....
    BBC NEWS | Business | Few cash in on rising house prices

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    Registered User TurboTomato's Avatar
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    Re: The Credit Crunch

    Quote Originally Posted by mikeyr View Post
    I dont want a mortgage! For those of you that know me know why, for the rest, read this.....
    BBC NEWS | Business | Few cash in on rising house prices
    Mikey, I'm not stupid enough to think that just because my house is worth more then I'm better off (I'm not saying you think I am, if you see what I mean ) - I don't have a property or a mortgage for starters! But I do want to get a mortgage and onto the property ladder at some point - though not at the moment, with interest rates having gone up and housing market showing signs it might have actually peaked. My reasoning behind doing that is thus: pension funds are seemingly not very good, so unless I put an unreasonably high percentage of my income into my pension, I'm not likely to get anything decent at the end of it. If I decide to rent for the rest of my working days then come retirement, where am I going to live? How will I pay for it?

    If I have a property of my own, with the mortgage fully paid off, then at least none of my pension will be going on simply getting a roof over my head.

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    Re: The Credit Crunch

    These sub-prime salesmen were going to do everything they could to hit their targets and make their commissions.

    "Isn't it risky to claim that I'm earning more than I am?"

    "No, everybody does it - the mortgage company knows that everybody does it - they expect it! All you have to worry about is whether you can afford the repayments - and you can, can't you?"

    "So I have to pay X dollars a month, is that right?"

    "Yes, X dollars a month. [Thinks: for 12 months, then it goes up to 2X; and as for the mortgage being a 25 year mortgage and you are 45 - don't even go there!] Just think - you'll own your own home - you'll neve have to pay rent again!"

    "What if I get sick and I lose my job?"

    "You don't have to worry about that - there's a built in payment protection plan [which will only pay out if you have both legs amputated on a Thursday in a month with a 'B' in it] which takes over paying the instlaments while you are ill [and you better get well within 12 months 'cos the payments stop after that]."

    "Well, OK then, seems like a great idea!"

    (The salesmen used to work for Enron selling energy contracts for less than they paid for them...)

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    Re: The Credit Crunch

    Quote Originally Posted by TurboTomato View Post
    If I have a property of my own, with the mortgage fully paid off, then at least none of my pension will be going on simply getting a roof over my head.
    I am not a financial advisor and I am not offering anyone investment advice.

    What I am saying, is know your risk, there is more cost to buying a house think most people realise and most people will not end up living in their first purchase. And the return is not as great as alot of people think.

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    Re: The Credit Crunch

    Glad to see the Daily Mail today mentions 2,000,000 homes may now be repossessed in the USA because of it

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    Re: The Credit Crunch

    Shed a tear for the Dynastar ski factory In Sallanches in the Chamonix valley, near the mighty Mont Blanc

    Many of its machines are idle and there is an empty, soulless feel about the place. Some 187 staff have just been laid off, out of a total of 217 .

    It woud seem many skiers making do with last season equipment

    ,

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