Too Funny

The housing bubble started the credit crunch, and the housing market will continue it. The reason we have a calm in the storm right now is simple. Remember the Titannic? At this point, everything seems like its getting better, because the losses are confined to the same old area. However, just as in the Titannic, when they get big enough, they spill over into other areas. How do I know that this will happen? Because the losses are flooding in faster than ever as housing prices sink like a lead balloon.

This quote from Mish's Global Economics Report is just classic.

Calvin Wimberly, a real estate agent who primarily sells bank-owned properties and has two listings under $10,000, said home prices in some areas have tumbled 200 or 300 percent in the past year. He said many suffered from mortgage fraud that artificially inflated values.

My Comment: Prices fell 300%? This guy needs a math lesson.

"Wimberly said he'd recently sold a home in West End that tells the tale of what's happened in some neighborhoods. The home sold in March 2004 for $305,000 and then in August 2004 for $700,000. It tumbled to $122,900 in a sale last year. It sold recently for $51,000.

My Comment: I would like to see a picture of that house. This smacks of fraud. In any case, the value of that home is now $51,000.

Mish doesn't state the obvious, but a 93% loss of value means a frightening loss for banks.

And S&P 500 earnings are supposed to springboard up 85% in the fourth quarter...