Date:
Mon, April 09, 2007 09:48:37 PMFrom:
The Daily Reckoning
Subject:
The Daily Reckoning - Will Subprime Take the Market Down With It?
Dear Daily Reckoning reader,
Last week, New Century Financial, the United States’ second largest subprime mortgage-lender (located right down the street from the DR HQ in Baltimore) went belly-up, owing $100 million and facing lawsuits and criminal probes.
On Friday, American Home Mortgage Lender, a large Alt-A (one step up from subprime) , announced it would scale back earnings forecasts in the first quarter and full year of 2007. They cite fewer buyers in the market, as well as a soaring number of delinquent loan payments.
These two are just the tip of the iceberg. According to the Mortgage Implode-O-Meter, 50 subprime lenders have gone kaput since the end of 2006...and our bet is that this number will just keep growing.
But the real question is: what will be the economic impact when all the debris is cleared? A slower economy, lax consumer spending, imploding mortgage market...who knows? One thing is for sure – it isn’t going to be pretty.
Below, Mish Shedlock explains both the source of the problem…and what’s likely to happen next. Plus, you’ll learn three ways to both protect and increase your own portfolio, as the second wave of the housing tsunami rolls into shore...
Cheers,
Addison Wiggin
The Daily Reckoning
P.S. Here’s a shocking fact: 80% of all option ARM borrowers can afford to pay only the minimum on their loans. And yet over $1 trillion in these loans are about to reset at higher rates this year alone. What will happen when millions of subprime borrowers start defaulting on loans they can no longer afford to pay? This story was interesting enough for Time magazine to pick it up this week...but they don’t know half the story. Keep reading for Mish’s full report...
WARNING ! Brace Yourself and Your Wealth for a Whole New "Second Wave" of Housing Hurt About to CRASH DOWN on Wall Street, the U.S. Economy, and the American Homeowner...The "Second Wave"
HOUSING TSUNAMI
Dear Friend, A tidal wave of hurt is heading for your money. Not just toward the equity you have in your house. But everything you have invested, saved, or otherwise set aside. And if you don't do something to protect yourself, you stand to lose everything. I know that sounds dire. But I'm really that worried. Fortunately, there are steps you can take to protect yourself. I'll show you three of them -- each a solid hedge against the coming bust -- that I urge you to consider taking today, right now. As soon as you're finished reading this report. First off, I'll give you the proof that the onslaught's coming. Then it will be up to you to decide how you want to protect yourself. Make no mistake -- I'm serious about this warning. This is no hiccup on Wall Street. It's a sweeping wipeout of wealth. Quite possibly, the most widespread fallout in the mainstream financial community in the last 76 years . Bigger than Enron. Bigger than the bust of 2000. Worse than '90-'91 and worse than the stock market bust of '87. Yet as far as I can tell, nobody's watching. Nobody's preparing. Worse, experts who should know better are telling you the exact opposite lies ahead. What I see as a crisis, they see as a hiccup. What I'll show you is just the tip of the iceberg, which they see as a so-called "buying opportunity." They couldn't be more wrong. And no advice could be more dangerous. As you'll see in the paragraphs below. I urge you to pay close attention. If you do nothing else, at least heed this part of my message . Now is NOT a time to rush out and buy more stocks. OR to load up on new "bargains" in the property market. Quite the opposite. As you're about to see, the smartest thing you could do right now is... "GET OFF THE BEACH!" What could I mean by that? Two years ago, I'm sure you remember, killer "tsunami" waves crashed down on miles of Asian coastline. Moments before, there was no warning. Skies were blue. A breeze blew in from the ocean. Then the ocean sucked out the tide, by hundreds of feet. Tourists snapped pictures. Children and locals ran out to collect shells and play with fish, flopping in puddles... oblivious to the crushing wall of water on the horizon. Until it was too late. The devastation wiped out nearly 300,000 victims, in barely the blink of an eye. I'm not trying to make light of a tragedy.
See, right now, it's easy for you to believe that maybe the worst could be behind us. After all, it's all over the headlines. And all over the press. Supposedly, says the myth, the economy has never been healthier. Wall Street can only go up. And property? The most recent bust, says the myth, has only opened doors for Americans to start buying all over again.
But if you're as savvy as I believe you are, you know exactly what I've seen myself... as head of a multimillion dollar financial research organization... that nothing could be further from the truth! To prove it to you, I'm sharing with you -- today -- a very different "blueprint" of the events that lie ahead. Before you're through, you'll see, as I now do, that the true bottom-line reality is indeed very different from what the Pollyannas of the financial press want us to believe... In short... Not only is the most dramatic property asset bubble of modern times clearly OVER... but the slip in real estate prices we've seen so far is not even CLOSE to being the beginning of the real devastation to come... not just in property, or even Wall Street, but across the ENTIRE U.S. economy, now and for at least the next three-four years, if not longer. If you're not ready yet, you'll want to be. A radical "reset" in over $1 trillion worth of shaky loans... re-doubling foreclosure rates... a bailout much bigger than the S&L crisis of the '80s... tremors that rattle the U.S. job market... plunging stock prices for retail, manufacturing, and car companies... and a wipeout for just about every mainstream "safe" investment you've ever heard of . There's no question a secondary housing bust this big will happen. The only question now is when. And, as I show you below, it will likely happen a lot sooner than most experts think. That's why I don't want to leave you without any safeguard. Which is why I'm writing to you today... Three Solid Layers of Protection Against the I want to show you three very powerful yet simple ways to protect yourself. They're simple to follow. And they're yours FREE, as part of something new that my team has put together. I call it the Emergency Financial Survival Toolkit: Triple Protection Against the Coming Collapse . And I'll rush it to you immediately, just as soon as you give me permission. Here's what you'll find inside:
Like I said, I'll rush you the details on this triple-layered money protection strategy FREE, as part of the Emergency Financial Survival Toolkit I had prepared especially for this coming, crushing event. T his Emergency Financial Survival Toolkit also gives you several other steps you'll want to take now. Plus, it will give you even better ways for you to deal with unstable markets every month for at least the next 12 months ahead. There's no charge for this triple-hedge protection strategy. Just ask and I'll send it. I'll sleep better just knowing you have all this in your hands.
After all, just think about what this could mean otherwise. Nearly 70% of Americans either own or are in the process of paying off their homes. Everyone WANTS to believe the worst has come and gone, because that's what's best for them. But we don't always get the market outcomes we want or expect. All I'm asking you... begging you... urging you to do... is let me show you a different vision of what lies ahead. And let me show you how to protect yourself and your money against potentially devastating impacts that nobody expects, including...
This is NOT what the fawning fortunetellers of Washington, Wall Street, or the real estate industry want you to believe. But that doesn't mean they're not real risks. Or that you shouldn't be ready when this whole new wave of financial wipeout arrives. You don't have to take my word on this. I'll simply lay out the proof for each of these dangers for you, and then you can decide. If you disagree, fine. Set down this report and move on, taking your chances. But if you see the same vision I see, if any of these shocking outcomes seems even slightly possible to you, then all you need to do is tell me where to send our new and completely original three-step wealth protection strategy, absolutely free. It's really that simple. You won't get such a straightforward, no-punches-pulled offer from everyone. In fact, you may not realize it, but forget tomorrow's market... because the powers that be have already lied to you -- on a huge scale -- about what's already happening in today's property market. How so? Let me show you what I mean... To learn more, please visit this link
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