But Blame we still assign to the institutions, like the feds and investment banks.
In an article in Bloomberg today UBS a Swiss based investment banker, is to cut 5500 jobs due to clients i.e. investors withdrew 12.2 billion dollars from their accounts Leaving them with significant less capital, leaving them no choice but to cut back o n their expenses.
Let stop and think for a second.
Question: Why would investors take out money from UBS?
The Answer: Subprime mortgage losses!
Question: Why didn't you take out the money before the investment into sub-prime mortgage loans took place?
Answer: Because I am an investor and I take risk! I felt that UBS had a strong reason for diving in head first I wanted to see if the UBS Strategy will ultimately pay off
Question: Did you feel comfortable about the newly found underwriting guideline at the time?
Investors answer: At the time I taught that since Home prices are on the rise, a lot of baby boomers are soon to be retiring therefore new second homes will be bought pushing the real estate prices further up, therefore the 100% loans and the no doc loans made sense because even if the loan is a 100% of the value this year, Next year the loan will only amount to 95% and so on year after year.
Question: Have you considered the potential of the need to repossess the house due to foreclosure and in that case your money will not perform even if your principal investment might be protected but it won't bring you a rate of return
Investors Answer: you right I didn't look into that, but I had faith in UBS and in their experience!
Question: so why change of heart now?
Investors Answer: I don't know I don't feel right!
Conclusion: The Investors does not feel right with having money with UBS but he did feel right before. So I have to quote Robert Kiyosaki, "There is no such thing as a risky investment, the investor is risky. By not educating himself correctly about the investment he is risky" So he will withdraw money look for a safer place to park it into like bonds (Mortgage bonds included) driving risky stock market down for a day or two and driving the bond market up for a day or two. In the interim, better rates for consumers.
Sincerely
Joel Silberstein
The Silberstein Group Mortgage Team
At Trump financial.
Joel,
How can we encorage you to write more often?
Bill
Bill thank you
It takes allot out of me to write but i will do my best
Sincerely
Joel Silberstein
Joel,
I prefer to talk myself.
So send me a didigal recording and we'll post it to my pod-cast http://wwwrealestatesage.info
There is always more than one way!
Bill
Sure will do
It is quite amusing to see a man your age so up to date with technology even more then the younger generation
I gues your living proof that our elders are our sages!
Sincerely
Joel Silberstein
"MY AGE"
"MY AGE"
I turned 60, 5 weeks ago.
I could have my parents drive to Brooklyn so my mother could help with the recording. Central Michigan is not that far.
"I gues your living proof that our elders are our sages!" Elder in deed!
We'll talk. :-)
Bill
Joel, don't forget about capitalization issues...the one of the next 12 shoes to drop! As people start drawing on savings/CD's because of the Home Equity Piggy Bank Bust and inflation further reduces an already horrific savings rate, banks will have to issue more stock to raise more capital. In addition to write-downs on bad loans and illiquid REO holdings not able to be counted towards capitilization, this is a huge issue. Who will buy the stock? At what price? How much lower can some of these bank stock prices go before more "Sell Triggers" are activated further driving down the prices.
Fun times.