Lehman, Merrill news

[Dancing Fire]

Date: 9/18/2008 3:42:39 PM
Author: Beacon
Downpayment does not matter. Pricing risk correctly matters. The fallout of this market was caused by the mispricing of risk.

Many properties are down more than 20% anyway, so 20% downpayment is already gone.

Think about credit card purchases: zero downpayment. Yah, the interest rate is a little bit different than a home loan. Risk is priced in.

Too much liquidity resulted in failure to acknowledge risk.

gone,but not under water yet. unlike those with 0 dp whom are giving up their homes since they have 0 $$ invested.

 

[diamondsrock]

Date: 9/18/2008 4:15:58 PM
Author: dragonfly411
In our area, including the entire county (in and outside of town) you can expect to pay well over 800 a month even for a single bedroom flat in the worst part of town. Outside of town prices go up. Where would you suggest a lower income couple live as they are saving and saving and saving? At home with the parents?? Most parents would not allow this, and if living prices are that high for an apartment, then how is that lower income couple going to manage saving ANYTHING towards a future house? BTW living outside of the city and commuting by bus is not an option here, in city yes, but even then.... that 800 doesn't include any utilities or furnishing of any kind mind you. Again that is a single bedroom run down flat apartment in the cringing side of town....

I agree that it is extremely difficult, if not impossible, for many people to afford a house today, even with the prices coming down. They were really way way way too high. 20% is an ideal situation and I know not everyone can afford that. To be honest, it makes me feel awful when I realize how expensive houses are today. We bought before the upswing in the market and I know today, if I had to buy my house on the open market as a new buyer, I would not be able to afford it.

I'd like prices to come down to help folks like yourself get into the American dream, but then all the people who lost equity will lose even more, which wouldn't help the economy either. Sigh. A no win situation I guess.

 

[Dancing Fire]

if Lehman and Merrill could of hang in there for a few more days ,they may still be alive today.

lunch time!

 

[Beacon]

Heh, LEH was a secondary catalyst (AIG primary catalyst) for the current government action, so we did need them to go out to provoke the remedy.

I have total faith that Ken Lewis of BAC was well aware the government was likely to take strong actions and was clued in and that is why he paid a rich price for MER.

It's now a clean up job.

What is interesting is: will MER have a double think about the deal price now? Even though BAC paid up, they only paid a big premium against a very low market value. BAC got a great deal. So did Barclay's who bought LEH business for a song.

Even if the MER-BAC deal fails (and it probably won't), BAC has an arrangement to get 20% of MER at 17.50 or thereabouts. Ken Lewis should get a medal!

 

[bee*]

Date: 9/18/2008 6:07:42 AM
Author: beau13

Date: 9/15/2008 4:00:00 PM

Author:Sizzle

Does this directly affect anyone here on Pricescope? I am VERY afraid where our economy is headed.

Unfortunately the American Economy affects everyone to some degree..even us here in Canada, will eventually be affected with the craziness going on over there!

It''s the same in Ireland. There''s talk of mergers between banks, lots of jobs are being lost, companies closing down etc. It''s awful.

 

[bee*]

Date: 9/18/2008 3:55:28 PM
Author: MC

Date: 9/18/2008 3:26:19 PM

Author: dragonfly411

DF I have to disagree here. This would make it virtually impossible for a lower income starting out couple to get a home. And in today''s market, renting is more than a mortgage payment! *at least near me*

I would speculate that point is that a ''lower-income starting out couple'' shouldn''t buy a home until they have saved up. . .going back to days when people saved and saved until they would be able to afford a home (that is before the crazy housing prices, of course). If renting is very expensive, then an option would be to move out away from the higher priced locations and commute into work (by bus???) and set aside a portion of income per month.


As Beacon said, many houses have lost 20 or more percent value, leaving many who put that money down screwed and needing to sell their housee and forced into short-selling. My neighbor is a realtor and she''s taken classes on short-selling and is always talking about highly stressful sales she''s encountering.

I''d have to agree with MC. Myself and D are a young couple starting out and there''s no way that we would buy a house without at least 20% deposit. There''s so many people in negative equity from buying houses on 100% mortgage in the last two years. It will be tough but we''ll get there.

 

[Dancing Fire]

another one bites the dust....

http://biz.yahoo.com/ap/080926/washington_mutual_future.html

 

[dragonfly411]

me = scared

 

[Dancing Fire]

Date: 9/17/2008 3:25:25 AM
Author: Dancing Fire
i have this bad feeling about Wachovia.

i was right about Wachovia

a lot more banks will go out of business. 1/3 of the banks in the U.S. will be gone before the dust settles.